Capitalizing on vast improvements in drilling techniques
in recent years, Colorado is on pace and expects to issue a record
number of drilling permits this year, state regulators say.
Drilling permits are expected to hit a record 2,700 this year,
substantially up from the 2,245 permits issued in 2003, said Brian
Macke, acting director of the Colorado Oil and Gas Conservation
"That would be the highest since 1981," Macke said --
and this pace is expected to continue for several years.
While there is some oil drilling and some coalbed methane exploration
in the state, most of the energy activity is focused on natural
gas plays, he said.
"Its primarily tight gas sand formations -- theres
been a dramatic improvement in well stimulation technology that
has unlocked the tight rock formations in sandstone," he said.
"In recent years, the techniques for drilling and completing
these wells have improved dramatically to the point where today
its economical to develop these resources," he said.
However, the availability of rigs has limited production locally
The states production of natural gas is projected to reach
a trillion cubic feet of gas in 2004. Wellhead revenues are expected
to be about $4 billion, officials said.
Weld County in north central Colorado remains the most active drilling
site in the state.
"Year in and year out, Weld County has seen a third of the
permits," Macke said. "Its because it has been the
subject of improvements in well deepening, well stimulation and
directional drilling practices that goes back for the last eight
As of the first part of the summer, some 439 drilling permits had
been issued there, mostly around Wattenberg Field, which is located
between Denver and Greeley. Some 10,000 wells are active in Weld
County, representing about 40 percent of the states drilling
activity, he said.
Meanwhile, the Piceance Basin in Garfield County, about 30 miles
west of Glenwood Springs, had received 377 drilling permits so far
this year -- about 29 percent of the states drilling activity,
"The other very active area is between Rifle and Parachute
in the Piceance Basin," Macke said. "Thats where
a lot of drilling rigs are running right now."
This part of the Piceance Basin is very large and covers parts
of Mesa, Delta and Rio Blanco counties.
"Its a giant," Macke said. "It has been an
active area for several years, but the total percentage of drilling
permits has been increasing here for the last 10 years."
The gas produced in Garfield County is fairly rich natural gas.
"Lately weve seen an increase in oil production in Garfield
County because of the condensate attributable to gas production,"
"Most people agree that the Piceance Basin will continue to
increase for the foreseeable future," Macke said. "Thats
the most rapidly emerging area. The development of better technology
along with an improved price environment is driving it."
Ken Wonstolen, general counsel for the trade group Colorado Oil
and Gas Association, agreed that drilling in the Piceance Basin
"The two fields with the most intense activity are the Piceance
and Wattenberg fields," he said. "Wattenberg is over 30
years old -- its still the gift that keeps on giving.
Theres been a lot of recompletion and refragmenting drilling
going on there.
"The Wattenberg keeps surprising folks," he continued.
"About 30 years ago, common wisdom was that it would peter
out, but its produced over 3 tcf of gas and has additional
In the Piceance, "theres been a fair amount of directional
drilling because of terrain issues," Wonstolen said. "The
Piceance is potentially one of the crown jewels of North American
gas reserves with 15 to 150 tcf of gas."
EnCana Corp. and Williams are the biggest drillers in the Piceance
play, he said. Kerr-McGee Oil Co. is the largest player in Wattenberg,
along with Patina Oil and Gas Co. of Denver.
Evergreen is active in the emerging fields of Raton Basin in southeastern
Colorado, while BP and Williams are active in the Four Corners area.
Another emerging area in Colorado includes Yuma County in the states
far northeast part, where active shallow marlstone formations are
now being developed.
Last year Colorado produced 1 tcf of gas for the first time in
history, and the state has more than doubled its gas production
in the last decade, he said.
Wonstolen said about 85 percent of what has been discovered in
the Rockies is still in the ground.
Currently, Colorado ranks as the sixth leading producer in the
country behind Texas, Louisiana, Oklahoma, New Mexico and Wyoming.
Experts believe that the Rocky Mountain states of Colorado, New
Mexico, Wyoming, Montana and Utah hold about 40 percent of the countrys