Energy boom could double northwest Colorado
DENVER ” A report released Friday predicts that northwest Colorado’s population could double to about 417,000 over the next 30 years because of the energy boom, and the number of gas wells could soar to more than 50,000.
The report commissioned by the Associated Governments of Northwest Colorado highlights the energy boom’s benefits ” job growth, revenue ” and costs ” increased infrastructure and capital expenses, higher housing prices.
The region could face $2.1 billion in costs over the next 28 years for roads, bridges, water and sewer plants and other improvements and up to a $1.4 billion funding shortfall for the infrastructure, according to Denver-based BBC Research and Consulting, which wrote the report.
The report says high housing costs, now matching or exceeding Denver-area prices, and labor shortages in other businesses due to competition from the energy industry have become pressing issues in the study area ” Moffat, Garfield, Mesa and Rio Blanco counties.
The projections don’t delve much into the impacts of commercial oil-shale development, considered to be at least 10 years away.
“Oil shale breaks our model,” said Ford Frick of BBC Research and Consulting. “We don’t know what to do with oil shale on top of all of this.”
The four counties are in the Piceance Basin, where natural gas development is growing the fastest statewide. There are about 7,500 active wells in the area and Garfield County accounted for 39 percent of the drilling permits issued through the first three months of this year.
The area is also rich in oil shale. Federal and industry estimates peg the amount of oil trapped in the rocks in western Colorado, Utah and southwestern Wyoming from about 1 trillion to 1.8 trillion barrels, or three times the proven reserves of Saudi Arabia. Of that, roughly 800 billion barrels are considered recoverable.
The U.S. Bureau of Land Management is writing an analysis of the potential impacts of commercial oil-shale development, not expected for at least 10 years. Companies are still testing ways to extract the oil.
If oil shale development takes off, 9,300 more workers would be needed by 2035, according to projections. About 4,500 more employees would be needed to produce natural gas and build and maintain power plants to provide energy for oil shale facilities.
The analysis of northwest Colorado’s energy industry grew out of area governments’ study of proposed oil shale development. The report’s analysis of oil and gas production says it will peak around 2015 but continue to be a major economic driver even after stabilizing.
The intensity of the development is expected eventually to shift from Garfield County to Rio Blanco County.
“While we don’t anticipate this boom coming to an end any time soon, there are certainly market conditions, other conditions that can change,” said Doug Jeavons of BBC Research and Consulting.
The area’s economy plummeted with the collapse of earlier attempts at oil-shale production. About 2,200 people lost their jobs on May 2, 1982, when Exxon shut its $5 billion project near Parachute, sending the area economy reeling for years. Residents still refer to it as “Black Sunday.”
After that, tourism and people drawn by the area’s lower housing costs helped diversify the economy, according to the report. Energy development has become a bigger part of the economy since 2000 and now makes up about 15 percent of the region’s jobs, direct and secondary.
Jeavons said the industry directly employs about 6,500 people in northwest Colorado and the total is expected to grow to 9,000 before leveling off.
Statewide, mining and natural resources, which include oil and gas production, employed nearly 27,000 people in February, according to state employment figures.
One of the energy boom’s challenges is a possible lag between the needs for new roads, parks, schools and the tax revenue generated by oil and gas production, according to the report. The report recommends a regional approach to sharing the costs and planning.
Pete Morton, an economist with the regional office of The Wilderness Society in Denver, said the report reinforces his belief that the pace of drilling should be slowed to ensure that communities can keep pace.
“I think it painted a pretty sobering picture of what northwest Colorado could look like,” Morton said. “It started to get at some of the costs of this development.”
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