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Piceance Basin's Gas Output to Fuel Region's Growth

Fueled by natural gas drilling, the energy boom will more than double the population over the next 30 years in Colorado's Piceance Basin region, according to a report.

Gas drilling in the northwestern part of the state is projected to increase through 2015 and remain relatively stable through at least 2035, said Rifle, CO-based Associated Governments of Northwest Colorado (AGNC), which commissioned a study by Denver's BBC Research & Consulting. Gas wells, which now number around 7,500, are expected to top 50,000 by 2035.with gas-related businesses continuing to fuel the local economy in Garfield, Mesa, Moffat and Rio Blanco counties.

Along with higher revenues and job growth, the 178-page study also detailed increased infrastructure needs and higher expenses. The four Colorado counties together could see their population swell to about 417,000 in the next 30 years. Revenues from natural resource extraction will be "substantial," but up to a $1.4 billion need may exist for needed capital improvements that would sustain the population necessary to support the energy industry at projected activity levels.

Over time, more of the gas-related jobs in the region will be tied to maintaining and reworking existing wells.

"Even with stable drilling activity, an estimated 50,000 additional wells may be drilled over the next 30 years," the report noted. "All wells will require support, gas processing, maintenance and distribution. Barring unforeseen changes in the national supply and demand for natural gas, the industry will provide a long-term supply of jobs."

Gas development and "the myriad of support services and secondary growth" that accompanies development will be a primary force for growth in the region, said the report. In the next 20 years the focus of new gas wells will shift to the north, from Garfield County to Rio Blanco County. By 2015 about 2,075 gas wells total are expected to be drilled in the four-county area, with the most in Garfield. By 2020, when an estimated 1,865 wells are expected to be drilled, Rio Blanco will lead the region.

The analysis grew out of area governments' concern about future oil shale development, which is not expected to become a big issue in the region for at least 10 years. The amount of oil trapped in shale in western Colorado, Utah and southwestern Wyoming is estimated to be 1-1.8 trillion bbl, or about three times the proven reserve of Saudi Arabia. About 800 billion bbl are considered recoverable.

"This study was commissioned originally because the state and region needed to prepare to respond to the U.S. Bureau of Land Management's programmatic environmental impact statement on oil shale," said Rio Blanco County Commissioner Ken Parsons. "As it turned out, the baseline economic conditions that BBC defined as part of developing an understanding of the potential effects of oil shale development ended up being rather shocking in and of themselves." Parsons also is vice chair of AGNC.

If oil shale development begins as forecast, about 9,300 more workers would be needed by 2035, according to the study. Around 4,500 more employees would be needed to produce natural gas and build and maintain power plants to provide energy for oil shale facilities.

"Oil shale breaks our model," said BBC's Ford Frick. "We don't know what to do with oil shale on top of all of this," he said of the gas growth in the region.

The report warned that even though the area is prosperous and growing, economic forecasts are subject to change.

"While we don't anticipate this boom coming to an end any time soon, there are certainly market conditions, other conditions that can change," stated the report.

Nearly 2,200 people lost their jobs in May 1982 when an ExxonMobil Corp. predecessor company shut a $5 billion oil shale project that was located near Parachute, CO, said the report. Since then tourism and lower housing costs have led to more diversity in the economy. Since 2000, however, energy development has become a bigger part of the region's economy, and it now is estimated to make up about 15% of the region's jobs, direct and secondary.

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