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March 31, 2022 12:04 PM UTC

Reality Check: Colorado's Oil and Gas Industry Alive And Well

  • 5 Comments
  • by: Colorado Pols

Colorado Public Radio’s Ben Markus reported news this week that, if you believe Republican and energy industry propaganda that’s been flooding the airwaves since the passage of the landmark reform oil and gas regulation bill SB19-181 in Colorado three years ago, seems absolutely unthinkable:

The number of active oil rigs in Colorado has nearly doubled in the last year, a sign that high prices are bringing the industry back to life.

Oil production in Colorado had fallen 11 percent in 2021, continuing a slide that began as the COVID-19 pandemic dramatically reduced demand, new regulations made drilling more costly and investors started requiring more caution from producers.

Companies in Colorado pumped 152 million barrels of oil last year, according to the latest data from the Colorado Oil and Gas Conservation Commission. That’s the lowest production since 2017, and more than 20 percent off record numbers in 2019.

But this year, the war in Ukraine has disrupted energy markets and demand is rising as the pandemic eases, sending prices over $100 a barrel in recent weeks, well beyond what’s needed to profitably drill wells in Colorado. [Pols emphasis] The number of drill rigs opening new wells in Colorado jumped from eight in March 2021 to 14 at the end of this month, according to Baker Hughes. That indicates more oil production is on the way.

Dan Haley of the Colorado Oil and Gas Association.

As it turns out, when the price of oil plunges to below worthless as a result of a historic crash in demand during a global pandemic, energy companies stop producing the stuff! Of course, if that happens to occur right after legislation in a particular state to protect public health over “fostering” the oil and gas industry goes into effect, oil companies get the consolation bonus of falsely blaming their political adversaries in that state for the global slowdown of energy production.

Which, as readers know, they did.

But as you can see, $100-a-barrel oil has an amazing way of cutting through red tape. When it’s profitable to increase production, like the all-female dinosaur troupe in Jurassic Park, somehow the industry finds a way! To a point, of course–no matter how much oil sells for, production capacity can’t be expanded instantly and drillers know it:

Even if the industry wanted to ramp up production, there are not enough workers to operate the rigs and wells. Many left during the pandemic slowdown. Mining and Logging employment in Colorado is down by about 10,000 workers, from 29,000 in 2019 to 19,000 in 2022, the lowest number of workers since 2006.

“Even if the industry wanted to ramp up production.” Everybody understands that the industry doesn’t really want to do this right? The sample fact is that high oil prices are good financially for oil companies, which means they have the world’s oldest disincentive to lowering energy prices as long as demand remains strong. The industry candidly admits to their shareholders that pure profit is all the reason they need to not increase production–even while they clamor publicly for new leases and permits they cannot develop in a timeframe that affects the current crisis.

The long-term solution to volatile energy prices and the foreign entanglements they oblige the nation to participate in is to reduce the demand for fossil fuel through the adoption of renewable energy replacements, which also happens to be the plan to combat what most of the world considers to be the greatest long-term threat to humanity’s survival.

Until we get there, the most important thing we can do is be wise–and honest–with what we have.

Comments

5 thoughts on “Reality Check: Colorado’s Oil and Gas Industry Alive And Well

    1. Yeah. I think the point of this post is more right wing STFU than liberals be happy. I want less drilling, period. Higher gas prices=incentive to transition to renewables.

      1. Left unsaid by industry mouthpieces is the primary driver of their reluctance to expand production, even though they might actually want to do so.

        Beyond manpower shortages and 60% dividends to shareholders, the Bigs are having a tough time finding investors. Investors fled the fossil fuel sector in droves when the bankruptcy pandemic hit the oil industry. 

        The American shale/ fracking tsunami lost in their bid to break OPEC, subsequently losing hundreds of billions of dollars of investors money. Giant investment entities around the world are reluctant to invest in a heritage fuel and the OilyBoyz have never been keen on funding exploration from "Hip National Bank".

        The Grand Junction Chamber of Commerce and its longtime honcho, Diane Schwenke just sponsored an "energy summit" featuring (exclusively, I think) a presentation by a company that makes teeny nuclear reactors (green energy..what?) and a lament from COGA about the challenges facing the oil and gas industry.

        It appears they didn't get the memo.

  1. Dan Haley presented at a breakout session at the Governor’s Ag Forum on the topic “What Agriculture Could Learn from the Oil & Gas Industry” (may not be exact, but close) I chose another breakout but what curious just what lessons we need to be taught? Subterfuge? Bad math? Treachery?

  2. "I'm in one of those moods.  I'm not gonna have much patience for lack of logic, stupidity, or other things.  This 'Drill Baby, Drill!!' is exactly what we need to do, and we should have been doing it for decades!"
    ~Rush Limbaugh

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