Colorado oil, natural gas production show steady rise

The Associated Press

While total U.S. oil production is expected to fall this year, production in Colorado is on the rise.

State oil production is projected to reach 21.9 million barrels this year, up 2.8 percent from 2003 and up 7.4 percent from 2002, according to the Colorado Oil and Gas Conservation Commission.

U.S. production, meanwhile, is expected to reach 2.04 billion barrels, about 3 percent lower than the previous two years, according to the Energy Information Administration based in Washington, D.C.

Colorado, whose oil production contributes about 1 percent to the national total in oil production.

“It is very significant that after years of decline, Colorado’s production of oil is showing an upward trend,” said Brian Macke, the commission’s acting director. “The uptick really is because of the increase in natural gas production in the Rockies,” which has resulted in secondary oil production.

Gas production up 10 percent

Despite rising oil production in the state, Colorado has not been among the top 10 oil-producing states since 1999. Production this year will fall far short of a record 61.2 million barrels in 1956.

Still, oil prices that are hovering at about $37 a barrel could mean more drilling in the future, said Jim Volker, CEO of Denver-based Whiting Petroleum.

The current prices have made it attractive to drill even marginal or slow-producing wells, and prices above $30 a barrel will boost drilling, he said.

“If a well produces 400 barrels a day, it pays off over 10 years — even at $20 a barrel,” Volker said. “But the wells in the Rocky Mountains last longer, from 10 to 30 years.”

Other gas-rich states also are expected to have higher oil production this year while traditional oil fields in the Gulf of Mexico and Alaska are steadily declining.

Production in North Dakota is expected to rise 5 percent to 84,000 barrels a day, while Montana is expected to top 2003’s 53,000 barrels a day.