When BP announced this week it has decommissioned one of the two drilling rigs it operates in La Plata County, there was every reason to be concerned about what that means for local employment and future tax revenues for the county. There was not, however, rationale to criticize the toughened statewide drilling rules the Legislature approved in its 2009 session. Instead, a drop in prices caused by an imbalance between supply and demand has forced the slowdown.
Natural-gas prices are at a five-year low - a gloomy fact for drilling companies, but one they no doubt anticipated when ramping up production in recent years when prices were high. The result is an overabundance of natural gas and not enough customers to buy it. This scenario is made worse by the weak economy that is negatively affecting consumers and producers across all sectors, but drillers contributed yesterday to their own troubles today.
Another factor in the slowdown - of pace and price - is recent discoveries of enormous pockets of natural gas across the country, and the simultaneous development of new technology that will make accessing it possible where it formerly was not. Huge natural-gas fields - which collectively are estimated to hold 2,200 trillion cubic feet of gas, or enough to meet U.S. demand for almost a century - have been located in Louisiana, Pennsylvania, Texas and Arkansas. Those deposits provide even more breathing room in terms of concern about supply - ultimately a good thing for consumers and producers alike.
With enthusiasm from private and governmental sectors, natural gas is poised to become an even more important resource for meeting the country's energy demands. Initiatives at the state and federal levels to move toward using the gas, which burns far cleaner than coal and other fossil fuels, in a broader range of applications are gathering speed and support. There is a litany of reasons for this push - including a lessened reliance on foreign oil and reduced greenhouse-gas emissions. The result is likely to be a long-term incentive for BP and its colleagues in the industry to continue drilling efforts across the country, La Plata County included.
There is no reason, then, to proceed without at least some caution. In Colorado and in La Plata County, that caution comes in the form of regulations - and regulatory agencies - that consider a range of issues and impacts that are associated with natural-gas extraction. The Colorado Oil & Gas Conservation Commission, the state Legislature, Gov. Bill Ritter, the La Plata County commissioners and a collection of conservation and public health groups have worked for years to draft and implement rules that strike a reasonable balance between the private - and public - interest of drilling for natural gas and other resources and the health, environmental and property-rights concerns that result. The products of these efforts are carefully crafted rules that effectively recognize all stakeholders.
The slowdown that led to BP's decision to decommission one of its drilling rigs is not without negative consequences for the county, though. In the coming years, tax revenue will drop, and the more immediate impacts of lost jobs - so far limited to contract positions - will not help the local economy. That is unfortunate, but pinning the blame - even part of it - on new regulations will neither change the situation nor contribute positively to any conversation about how to remedy it.