It's The Economy, Not The Drilling Rules (Stupid)

6 thoughts on “It’s The Economy, Not The Drilling Rules (Stupid)”

1. to the rules not being a significant factor in the state’s drill rig count,

   the likely costs of the rules were way overblown by industry, as detailed in this story in the Grand Junction Free Press.

   Here are a few quotes:
   

   Williams Production spokeswoman Susan Avilar said the company will not lay off anyone because of the new rules.

   Cordilleran included costs for pre-existing rules in its report – another reason the commission said the report did not reliably indicate true costs.

   For example, Cordilleran projected substantial costs to on-site consultation with surface owners, ranging from $11,500 to $223,000 per well.

   “But this has been an existing requirement under our on-site inspection policy since 2005,” Neslin said.

   …

   As another example, Cordilleran’s report said a rule requiring consultation with local governments would cost up to $8,000.

   “But local governments already have that right under an existing rule. So it’s not a new cost,” Neslin said.

   The “costs” of the new rules (when not hyper-inflated and double counted for ideological purposes) merely quantify costs that the industry has been externalizing and that the people of Colorado were having to pay.

   (Also note that even after the recent “losses” the rig count in Colorado is still 10% higher than anything seen during all of 2006 during which nearly as much gas was produced as during 2007 and what is projected for 2008.)

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   1. below, a new Baker/Hughes report out the date of the Salzman piece shows that CO gained 4 rigs while two of our most prolific gas-producing neighbors lost them.  Texas, with some of the laxest O&G rules around lost the most…

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2. This is not the first time rigs have moved out of Colorado.  The mid-80’s were very difficult times for oil and gas.  Mobil and Amoco both closed up shop and headed back to Houston; along with merging with European oil producers.
   

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   1. to raise prices to the point of absurdity, forcing people to conserve, makes a price dive come out of left field.  Hmmm, if only there’d been a way to see this coming.

      You really have to admire their brazenness, can you imagine making record profits and six months later complaining like this?  Meanwhile the rest of us are paying way too much for cars, not asking for raises, trying to find ways around having health insurance, etc.

      But poor O&G!

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3. .
   
   I thought that they were saying that, if we didn’t keep their $300+ Million in tax breaks, then they might pull rigs out.

   So, like suckers, we vote to let them sever mineral products almost tax-free,
   
   and still they leave ?
   
   Who saw this coming ?
   
   .

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   1. They drill when prices are high and stop drilling when prices are low.  Colorado=America’s energy colony…

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