Energy News: local hack contradicts boss, no story at 10

( – promoted by Colorado Pols)

Today a former Rocky reporter, now working for the Denver Post, repeated without challenge the propaganda of EnCana’s Colorado spokesperson Doug Hock.

EnCana Oil & Gas (USA) trimmed its investment in Colorado from $700 million in 2008 to $400 million this year, partly because of new drilling rules, spokesman Doug Hock said.

“We have cut down investment by 10 percent in Texas and Louisiana, 30 percent in Wyoming,” Hock said. “That’s where you see the connection with the rules in Colorado, where we cut back 40 percent.” Denver Post – April 24, 2009

 

A quick check of EnCana’s 1st Quarter Report, released just two days earlier would have revealed another trend that might have been of interest to Post readers…

The Q1 financial statistics reveal that EnCana has also cut down investment in Canada by 40% (from US$1.04 billion in the 1st Q of 2009 to US$624 million in 1st Q 2008) while increasing overall investments in the US by 4%. See EnCana 2009 Q1 Report – April 22, 2009. Armed with this information, this reporter could have asked Doug Hock to (1) explain the similarity between trends in Colorado and Canada and (2) explain why shareholders are being told investments are increasing in TX & LA while he is telling reporters they are decreasing.

Post readers might also have benefited from a contrast of Doug Hock’s talking points with those of EnCana’s President and CEO during the April 22 phone conference with shareholders. For example, consider this explanation for EnCana’s focus on Louisiana rather than Colorado:

The company has committed to reducing costs across the board by 10 per cent this year, and part of the savings will be reallocated to programs like the Louisiana resource, where labour and service costs are cheaper and the infrastructure to carry the fuel to market is extensive, [EnCana president and chief executive Randy Eresman] said. (Emphasis added)   Calgary Herald – April 23, 2009

Reporters that repeat the tired old misinformation eagerly disseminated by O&G spokespeople are doing a great disservice to the people of Colorado. Industry spokespeople are paid to redirect responsibility for bad news. Reporters should not make their job easier by repeating it without challenge. In less than one (unpaid) hour I was able to uncover the information provided to EnCana shareholders that sheds some doubt on Doug Hock’s assertions that the new COGCC rules are a dominant driver of O&G investments in Colorado (driving from 25-75% of the cut in investment).

Within the same hour I found other reports that served to explain, rather than blame. For example:

When overall energy demand fell, the demand for natural gas also plummeted and “resource plays”, particularly the ones in remote regions without good gas pipeline infrastructure are no longer profitable. Drillers have cut back dramatically and plays like Colorado’s Piceance Basin or “Western Slope” regions that can’t command even “market” prices for natural gas are grinding to a halt.

For western Colorado, something on the order of $5.00 per thousand cubic feet (MCF) is probably needed to sustain the activity level. Currently, producers are receiving more like $2.25 to $3.00 per MCF. Denver Energy Examiner – April 23, 2009

And:

The limited gas pipeline infrastructure of the area precludes open access to the more lucrative central US and west coast markets forcing Colorado producers to suffer severe price discounting (the “differential”) as compared to those markets.  Natural gas bring $6.00 per MCF (thousand cubic feet) at the Henry Hub central distribution point in Oklahoma may only bring $2.50 to $3.00 per MCF at the well head in Rifle, Colorado due to the tariff and transportation costs associated with getting it to market. Denver Energy Examiner – April 18, 2009

Now it may well be true that the new COGCC rules are having some influence on O&G investments in Colorado. Indeed, I have no doubt it is true. But when a local industry spinmeister says something that is very nearly completely at odds with the CEO of the same company, somebody is speaking less than the entire truth. An informed reporter should be asking the follow up questions that will expose this.

There’s even more disturbing information out there, but after an hour of reading and writing, I had to quit. I was only getting more irate. I know this former Rocky reporter can do better work (she contributed some wonderful in-depth and analytical reports when she was with the Rocky).

The people of Colorado deserve to know and understand what is going on with energy development in the state. Indeed, this may be a critical issue that influences some elections in 2010. Doing what amounts to essentially reprinting industry press releases is harmful.

We have some tough decisions to make over the next decade. Issue advocates have the resources to get their message to us in every mailbox, unadulterated and on glossy paper. Media sources that repeat talking points, rather than provide information, should fail.

Discuss.

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15 Community Comments, Facebook Comments

  1. Ralphie says:

    Media sources that repeat talking points, rather than provide information, should fail.

    Or go to work in Grand Junction.

  2. Sir RobinSir Robin says:

    You make a couple of excellent points by refreshingly providing good journalistic subject and content on this matter, and also by pointing out the lame performance of reporting these days.

  3. WestSloper says:

    According to an EnCana report to a Garfield County energy group, the reasons below are why Colorado is experiencing a drilling slow-down. Seems like Hock should read his company’s internal sources instead of regurgitating propaganda:

    Rockies prices are generally depressed relative to other US pricing points

    Cause

    1. Strong production growth and vast resource base given recent technology advances

    2. Limited local demand -less than 25% of current supply

    3. Mountain terrain presents challenges for drilling and building infrastructure (high-cost environment)

    4. Timing disconnect between new supply and new infrastructure

    5. Constrained export capacity to consuming regions

    Effect

    1. Lower regional prices complicate the capital allocation process

    2. Field development plans must include infrastructure cost and timing

    3. Producers need to drive proactive long-term solutions “Wait and see” approach too risky

    Source: Oil and gas marketing review http://www.garfield-county.com

  4. Duke Coxdukeco1 says:

    about the effect on Rocky Mountain gas prices from the deal cut by Royal Dutch/Shell and Gazprom to import a million tons of LNG (liquified natural gas) annually into the U.S. market. In order to get assurances from Gazprom to keep the supply of Russian gas coming to Europe, Royal Dutch/Shell has agreed to import LNG from Russia to mour west coast for at least ten (one source said twenty)years.

    The Colorado Oil and Gas lobby and our good Republican Caucus friends have been completely silent about this deal. Is it their contention that this deal to import Russian gas will not adversely affect our Colorado companies? Where is the outrage from Brophy, Penry, McNulty, and Gardner on this?

    Gentlemen?  

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