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Publish Date: 5/9/2005

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A new EnCana Oil & Gas well is drilled near Fort Lupton on May 3. While oil production continues in Weld County, it no longer is the centerpiece of resource development in Northern Colorado. Oil and gas experts believe Weld County’s primary oil field, the Spindle Field in the Carbon Valley, has dwindled.Times-Call/Jen Ooton

Natural gas becomes a hot commodity in Weld


FORT LUPTON — Underneath the flat and mostly open landscape of rural Weld County exists a vast network of pipes carrying one of the region’s richest and most sought-after commodities: natural gas.

Illustrating the scale of the delivery system, Byron Gale, an engineer for EnCana Oil and Gas, stood next to a wall-sized map of Weld County and portions of Boulder County in the company’s Fort Lupton office.

On it, a maze of purple and green lines more dense than the road system covering the land represents where EnCana has pipe in the ground to move natural gas from 755 wells to production facilities around the county.

Encana’s network is one of three “gathering systems” in the Wattenberg Field, a rich deposit of gas and oil stretching along the Rocky Mountains into Wyoming.

Duke Energy Field Services and Kerr-McGee Corp. also have expansive gathering systems underneath Weld County fields, unseen by farmers, ranchers and commuters.

Highly visible, though, are the black oil pumpers, most numerous east of Interstate 25 in the Carbon Valley.

While oil production continues in Weld County, it no longer is the centerpiece of resource development in Northern Colorado. Oil and gas experts believe Weld County’s primary oil field, the Spindle Field in the Carbon Valley, has dwindled.

Today, natural gas, once a nuisance to oil-drilling roughnecks, pays the bills.

“Gas is a real hot commodity; if we didn’t produce it, folks’ monthly gas bills at their homes would be a lot higher,” Gale said.

The Colorado Oil and Gas Conservation Commission estimates that this year’s oil and gas permits will outpace any other year in its history. And natural gas is driving that increase.

For 2005, the commission expect to grant 3,331 drilling permits, topping last year’s record high of 2,917.

The previous high was in 1981, when 2,378 new wells were approved.

“This year we are in, it is very likely to establish another record,” said Brian Macke, director of the Colorado Oil and Gas Conservation Commission. “That’s being driven by the very high oil and gas prices. Exploration and development ventures are much more economical than they have been in recent years.”

Over the past two years, natural gas prices have more than doubled. In late 2002, natural gas was selling for about $2.50 per million British thermal units. Now, it sells for about $6 per million Btu. In fact, natural gas prices this April were the highest for any other April on record.

“It’s a very dramatic increase,” Macke said. “It’s unprecedented. That’s because of a very significant supply-and-demand imbalance.”

Ted Brown, senior vice president of Patina Oil and Gas, said those high prices allowed his company to expand its research to extract gas from its 3,300 wells in the Wattenberg Field.

“What increased commodity prices do for you is that it allows you to explore projects that you normally couldn’t do,” Brown said.

In 2005, his company will use a new drilling process it has invented to revitalize 500 old wells.

“Each time we do it, it’s almost like turning on a new well,” Brown said.

His company also has increased its capital budget for Wattenberg 35 percent, from $110 billion in 2004 to $150 billion this year.

Gas prices have spiked in the wake of increasing demand for natural gas and declining natural gas production in historically strong producing areas — particularly the Gulf Coast and mid-continent region of Texas and Oklahoma.

The Rocky Mountain region is known as a huge resource of natural gas, and companies such as EnCana, Denver-based Patina Oil & Gas Corp. and Kerr-McGee focus their exploration efforts here.

In the approximately two minutes it’s taken you to read this far, the Wattenberg Field has produced enough natural gas to heat 11 Colorado homes for a year.

Natural gas and oil drilling and production have remained relatively steady in Wattenberg for several years. In 2004, Weld County accounted for 28.5 percent of new oil and gas wells statewide. So far in 2005, it has accounted for 27 percent of new well permits.

However, statewide natural gas production has increased dramatically since 1999, when about 1.98 billion cubic feet came out of the ground each day. Last year, Colorado produced 2.96 billion cubic feet of natural gas per day.

This year, oil and gas experts expect that number to climb to 3.11 billion cubic feet per day.

The Wattenberg Field supplies about one-third of the natural gas consumed by Front Range homes and businesses. Natural gas also is a significant revenue base for the state in terms of taxes, employment and ancillary benefits to local communities.

Oil production also has continued in Weld County. In 2004, the county produced the bulk of Colorado’s oil: 30,000 barrels of oil a day. Total statewide production was 61,100 barrels per day.

But oil goes hand and hand with gas production, Gale said. Many wells naturally draw gas, oil and water at the same time, and they are separated on site. The water is returned deep into the ground, through replacement wells. The natural gas and oil are sold.

But EnCana has set its sights on natural gas production because its officials believe the richest oil deposit in the area is running dry.

The Spindle Oil Field, underneath the Tri-Towns, has historically had the most accessible oil deposits in Weld County.

“The oil in the Tri-Towns has basically played out,” said Kerry Byers, production coordinator for EnCana.

Wells still produce, he said, but their heyday may be over.

Brown said the rest of the Wattenberg Field still produces oil, just not at a very high rate. Patina’s wells generally produce two-thirds natural gas and one-third oil. Kerr-McGee’s 3,000 Weld County wells all produce primarily natural gas.

When the Wattenberg Field was discovered in the 1970s, sparking oil exploration in Weld County, rival companies dispatched spies to keep close watch on each other’s wells. Tricks of the oil trade and industry secrets were kept close to the vest, Gale said.

Now, the companies seeking natural gas work closely together to reap all the resources from the ground. They even use each other’s delivery systems, he said.

The goal is to gather every ounce of natural gas to protect “the nation’s energy picture,” Gale said.

If companies don’t do that, he said, “it will go to waste.”

Douglas Crowl can be reached at 303-684-5253, or by e-mail at dcrowl@times-call.com.

Jenn Ooton can be reached at 303-684-5295, or by e-mail at jooton@times-call.com.

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