Chevron latest company to scale back drilling
Aspen, CO Colorado
GRAND JUNCTION, Colo. ” Falling natural gas prices has Chevron Corp. to back off plans to boost drilling and investment in northwest Colorado.
The company had planned to double its drilling north of DeBeque and increase its investment by 50 percent. Instead, Chevron will continue its current spending for the next three years.
“We’re just taking a little bit slower, more paced approach to the program,” Chevron spokeswoman Kristi Pollard said Wednesday.
Industry officials have said the number of drilling rigs operating in northwest Colorado’s Piceance Basin could decrease by 35 to 40 percent over the next few months. They cite gas prices, the credit crunch and new oil and gas rules being considered in Colorado.
Williams Production, one of the area’s major producers, has said it will run 20 drilling rigs in the basin next year, down from 26 this year.
There’s been no slowdown in the number of drilling permits in Colorado. The state has issued 6,739 permits through Nov. 6, compared with 6,368 permits for all of last year.
Chevron’s decision to go slower means it won’t expand its local work force to 80 from 63 or increase its contractors to 500 from the current 300.
Pollard said “it would be false” to pin the decision to slow down on the new regulations being considered.
“We do take that into consideration, but there were a lot of other factors at play as well,” she said.
The industry has objected to several of the proposed oil and gas rules that would give more weight to environmental, wildlife and health issues. The Colorado Oil and Gas Conservation Commission is expected to take a final vote on the rules in December.
Companies have also lamented the limited pipeline capacity in the Rockies. More pipelines have been built or expanded to ship the gas to other markets, but companies have said more capacity is needed.
Chevron has long-range plans of drilling 2,000 wells on 40,000 acres north of DeBeque over 15 to 20 years and investing about $7.3 billion over about 50 years.
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