Western Values Project aims to provide members of the media, policy makers and the public with an honest, accurate and rhetoric-free source of information about energy development on public lands.Federal Well Types and Status Source: BLM FY 2015 Idle Well Report (IM No. 2012-181). Historically, federally-owned minerals in Colorado have been chiefly-valuable for natural gas rather than oil. In […] Read More
Historically, federally-owned minerals in Colorado have been chiefly-valuable for natural gas rather than oil. In February 2016, approximately 90% of federal wells in the state were gas wells, while only 10% were oil wells. For this reason, and as shown below, trends in federal leasing, permitting and drilling in Colorado tend to closely track gas prices.
Sources: BLM Oil and Gas Statistics, Energy Information Administration.
The graph above shows the direct relationship between industry interest in federal leasing and natural gas prices in Colorado. In 2007, when gas prices were nearly $7/MMBtu, industry nominated more than 1 million acres for leasing, but last year, with gas nearing $2/MMBtu, nominations totaled less than 15,000 acres.
Permitting is also closely tied to gas prices in Colorado. In 2007, when gas prices peaked at $7/MMBtu, BLM issued nearly 700 drilling permits, but BLM issued half as many permits in 2002 and 2015, when gas prices hovered near $3/MMBtu.
Just as federal mineral development in Colorado has closely tracked gas prices, development of non-federal minerals has closely tracked oil prices. In Colorado, the vast majority of oil and gas development takes place in two counties, Weld and Garfield—in 2015, 80% of all new drilling permits in the state were issued for sites in Weld and Garfield.
While Weld County falls within Colorado’s major oil-producing basin, the Denver-Julesburg Basin, and contains less than 8% of federal mineral estate, Garfield County falls within Colorado’s major dry natural gas basin, the Piceance Basin, and contains almost 73% federal mineral estate. The graph above shows how development has shifted between the two counties, and between federal and non-federal minerals, based on commodity prices—illustrating how oil and gas prices are the primary driver of permitting on federal and non-federal lands in Colorado (and more broadly).