Selling a Rocky Mountain high in Calgary

Colorado delegation woos Canadians with invitation to build cross-border energy bridges; governor says ‘we want to be your partner’

Gary Park

Petroleum News Calgary Correspondent

Colorado has rolled out a welcome mat to Canadians, inviting northern energy companies to set up shop in the Rocky Mountain state and build on a burgeoning relationship.

In a reversal of the traditional flow that has seen U.S.-based firms engage in multi-billion-dollar takeovers of Canadian-owned companies, a high-powered delegation from Colorado spent two days in Calgary promoting cross-border investment.

What the two jurisdictions have in common is a similar geology that opens the door to sharing expertise and knowledge in the rapid expansion of unconventional plays such as coalbed methane and tight gas.

The 50-member group was led by Gov. Bill Owens and Denver Mayor John Hickenlooper.

“We want to be your partner,” Owens said, noting the synergies between Denver and Calgary and Colorado and Alberta. He said the objective was not to sign a deal during the trip, but to look for long-term commitments in the next year or two.

“We want (Canadian companies) to know that we are open for business,” Owens said.

Cross-border activities already extensive

• EnCana’s $2.7 billion takeover of Denver’s Tom Brown last year, adding to its extensive holdings in the U.S. Rockies that will see 6,000 new wells drilled in the next five to 10 years, 60 percent in Colorado’s Piceance Basin. The big Canadian independent is already producing more than 1 billion cubic feet per day from its U.S. holdings.

• Petro-Canada’s $534 million acquisition of Prime Energy in 2004, setting the stage for 300 wells in the Rockies, 50 of them in the Denver-Julesburg Basin.

• Suncor Energy’s $300 million investment to upgrade and modify a 63,000 barrel-per-day Denver-area refinery it bought from ConocoPhillips in 2003.

• Trident Exploration, co-founded by Denver entrepreneur Charles McNeill, expects to drill up to 900 wells in the Canadian Rockies this year as part of a $500 million capital budget.

• Aspect Energy, run by Don Wolf, former chief executive officer of Westport Resources, is probing unconventional gas prospects in Canada.

• Denver-based Western Gas Resources opened a Calgary office this year and is seeking a joint-venture partner to tackle unconventional gas in the Canadian Rockies.

• The University of Calgary and the National Renewable Energy Laboratory in Golden, Colo., are discussing collaboration on renewable energy technologies, energy efficiency programs and ways to improve the efficiency of electrical grids.

Some of the Colorado team spent a day in the Alberta oil sands, where Newmont Mining, the world’s largest gold producer, has spent $450 million on projects.

Owens noted that Colorado generated $8 billion worth of petroleum products in 2004, a surge of more than $5 billion in one year, while state drilling set a new record of 2,900 wells, with 3,400 wells in sight for 2005.

On the plus side, technological advances have opened up 85 percent of the U.S. Rockies resource base.

But Canadian companies are warned they face tough competition in Colorado, especially given the shortage of engineers, geologists and geophysicists.