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Less drilling

Blame economics, volatility of industry

What is going on with the gas industry in La Plata County is a demonstration of the global forces that drive the gas and oil industry. Decisions as to where or when to drill turn on geology, technology, money and little else.

When Gov. John Hickenlooper created a task force to study the regulation of gas and oil drilling, there was concern expressed in some quarters that local governments might regulate the industry out of Colorado. But Hickenlooper formed the task force as part of a deal to kill ballot measures that could have had far more impact than anything likely to emerge from the task force.

Besides, the task force was set up so that while it does include critics of the industry, it also includes industry representatives. Nothing that could win the approval of the overall task force could be so draconian as to actually force the industry out of anywhere.

Nor would more than a few Colorado residents want to do that. In La Plata County, residents like the gas producers helping with property taxes. That their share is diminishing can only hurt. (Taxes can only be raised by a vote, but county services can be cut.)

What does affect the industry is the global market for gas and oil. And right now prices are down.

The industry also has options. Even with prices down, drilling for oil is more profitable than drilling for gas. A lot of gas production today is a by-product of oil drilling in places like North Dakota.

Technology also plays into this. Improvements to fracking techniques, directional drilling and advances in computing power have allowed drillers to reach oil and gas in hitherto impossible places.

But none of the decisions that led to any of the current circumstances were made by local gas producers or local regulators. They were made in places like Houston by people looking at global conditions and with little regard for anything happening here.

La Plata County first adopted stringent regulations about drilling in 1991 – at least those were the first regulations tough enough for a gas company to sue over. The county won that case, but what followed were the boom years. Production peaked in 2003.

The drilling boom may be over here or changes to the global situation could revive it. Either way, it will have little to do with Hickenlooper’s task force.



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