The oil and gas industry in Colorado has seen a steep decline in production, rigs and employment during the pandemic not previously seen in decades, concerning many in the industry.
Colorado Public Radio reported that oil production in the state has dropped 13% compared to the same period a year before. It’s the steepest four-month drop for producers since at least 2001.
“It’s been a difficult year for our industry,” Colorado Oil and Gas Association CEO Dan Haley said, noting that the demand, driven by travel, has fallen because of the pandemic.
The state has also recently approved several regulations, including 2,000-foot setbacks between wells and occupied buildings, resulting in uncertainty for some operators, he said.
Baker Hughes, an oil field services company that keeps track of rigs nationally, has reported only four oil and gas rigs are currently operational in Colorado. The state has previously never had fewer than 16 rigs drilling at one time, company officials said.
As a result, employment in the industry has dropped about 18% year-over-year in September.
Bernadette Johnson, vice president of strategic analytics at Denver-based firm Enverus, said oil prices have hovered at around $40 a barrel since summer. “That price just doesn’t support much drilling at all.”
Recent vaccine news has raised hopes for some that things could return to normal next year. But officials in the oil and gas industry have said there will likely be more consolidation.
Already two of the state’s largest producers have new names – Anadarko Petroleum Corporation was scooped up by Occidental Petroleum Corporation and Noble Energy, Inc. by Chevron Corporation.
“I think we’ll continue to see more of that,” Haley said. “We’ll see more mergers and acquisitions as companies are trying to find ways to increase their cash flow and make sure that they’re ready to compete in Colorado.”
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