Denver Post
Colorado on pace in 2010 for third most permits issued for oil and gas drilling

Tuesday, December 21, 2010

Colorado permits for oil and gas drilling are expected to reach the third-highest level on record in 2010.

Permits issued by the Colorado Oil and Gas Conservation Commission are projected to top 6,000 this year, up at least 16 percent from 5,159 in 2009.

The increase suggests that Gov. Bill Ritter's tightening last year of regulations governing drilling — hotly contested by the energy industry — have proven manageable for producers.

The number of active wells in western Colorado's Piceance Basin has fallen from 91 in 2008 to 35 this year, according to Golden-based research firm Bentek Energy LLC.

Bentek chief executive Porter Bennett said new gas discoveries and fast-growing production in Pennsylvania and other areas in the East and Midwest have lessened the demand for Colorado gas.

"All of a sudden you have all this gas in the East, and you don't need it from the Rockies," he said. "There's just no market for it, and as a result, prices are weak."

Prices for Colorado and Wyoming gas were running Monday near $3.80 per thousand cubic feet, compared with $5.55 last year.

Bennett said drilling permits can be a misleading indicator of market activity because producers don't always use all of the permits granted.

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