The boom-bust cycles of energy-rich Western Colorado

Over the course of the past decade, thousands of natural gas drilling rigs have been erected throughout tthe Piceance Basin of western Colorado causing many small towns in the area to experience booming economic development.  Readily available leases on federal land, high energy prices, and a growing sentiment in America for energy independence through the use of more fossil fuels resulted in western Colorado becoming one of the main hotspots for natural gas extraction in America.  Today, though, the story of some of these boomtowns, like many others in the past, is a cyclical one; after the boom comes the bust.

The Piceance Basin stretches to the northwest and to the southwest along Interstate 70 in western Colorado and includes such towns as Silt, Rifle, and Parachute.  The natural gas drilling in this area has been a curse, as well as a blessing for these towns over the course of the past eight years.  With energy companies hiring thousands of workers per year, real estate prices boomed, developments sprouted, and town coffers were filled; the ugly side of the energy developments was the destruction of wilderness, compromised water quality in some instances, and the government’s claim to mineral rights on people’s private property.

One town in particular, Parachute, is feeling the curse of relying primarily on energy development for economic growth.  With the economic crisis finally being fleshed out in the oil and gas industries, many drill sites in western Colorado are being shut down.  Accoring to the L.A. Times, “the number of active oil and gas drilling rigs in the U.S. is down 13% from its peak in August”.  Many towns that were sharing in the wealth created by the energy boom are now finding themselves asking the same question that they had asked in the past when they had gone through similar boom times that ultimately busted.

This is not the first time that certain towns in western Colorado have busted after they have experienced economic prosperity.  Back in 1964, Tosco Corporation began a project near Parachute Creek called the Colony Oil Shale Project.  The goal of the project was to build a commercial scale plant that extracted oil from the local shale rocks.  The oil embargo of the 1970s pushed the project forward, but then oil prices began tumbling, costs of extracting began escalating, and interest rates rose.  The operation was ultimately closed down, and thousands of employees were put out of work, sending the town to Bust-ville on a day that locals call ‘Black Sunday’; that was 1982.

Here we are 27 years later, after the Bureau of Land Management (BLM) just completed a massive, multi-year sale of oil and gas leases on public lands, ...oil and gas prices are tumbling and costs of extraction are escalating due to “more restrictive drilling regulations being adopted by the Colorado Oil and Gas Conservation Commission (COGCC) in December after a year of negotiations and debate”.  

Parachute knows the cycles of boom and bust intimately.  While the natural gas industry around Parachute begins what seems like their most recent bust phase, the oil shale industry in the area began...

Full article at:

http://www.examiner.com/x-2903-Energy-Examiner
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