Grand Junction Boom and Bust (Parachute, Moffat: real estate, school, live)

[Nevada1]

My wife and I are considering a move to Grand Junction. We are concerned about the recent boom in natural gas there and wonder how long the current trend is expected to last and what will happen when is slows down (meaning is a bust going to happen). I am having trouble finding information online.

I am a professional and work in real estate development, so continued growth is very important for my career.

[jazzlover]

First, I am not one who has any great love for developers, as my other posts will reflect. Much of their effects in Colorado have been negative, not positive. As for Grand Junction, it is showing all the signs of an "overheating" economy that plague most "boom" areas--i.e., overdevelopment, speculation, unsavory business practices, the whole nine yards. Grand Junction went through this back in the oil shale days in the 1970's and early 1980's. When that boom ended--abruptly, with the shutdown of the Exxon shale project at Parachute in 1982--Grand Junction went into a decade-long semi-depression. (I lived through that in western Colorado--it was no fun.)

The current boom in Grand Junction is being fueled by feverish gas well drilling--mostly coalbed methane drilling in the region surrounding Grand Junction. This boom may run for awhile, because natural gas is the "darling" of fuels these days, and new pipeline capacity is coming online to get gas out of the Rocky Mountain region to other areas of the US. There are two big risks to that boom continuing indefinitely. One would be a large decline in the natural gas price. I consider that relatively unlikely for awhile, but inflating costs to drill and produce the gas may start to bite at some of the marginal drilling down the line. The other factor is that gas fields, like any fossil fuel reserves, are finite. There is only so much drilling and production that may occur--then the fields decline. Gas is also different than oil in that the decline in production from a gas field usually occurs quickly once it begins--it doesn't just slowly trail off as oil production does in an aging oil Field. When will the fields in western Colorado start to decline? Good question.

The other unknown is oil shale. If it comes online on a major scale, Grand Junction might continue booming for a while. Of course, oil shale development has always been "just around the corner" since the crap was discovered over a century ago. I'm not holding my breath.

My personal opinion is that a better career option is to work in the industry cleaning up the mess that the developers have made (and continue to make) of Colorado--that's a real "target-rich" environment. "Growth"--at the least the kind we have had in Colorado in the last 10 to 20 years or so, is not popular with quite a few Coloradans, and not just the "enviro nuts."

[multitrak]

Originally Posted by jazzlover

The current boom in Grand Junction is being fueled by feverish gas well drilling--mostly coalbed methane drilling in the region surrounding Grand Junction.

nope, it's tight gas sand exploration and development, not coalbed methane

Colorado Activity :12:2006 EXPLORER

[jazzlover]

Originally Posted by multitrak

nope, it's tight gas sand exploration and development, not coalbed methane

Colorado Activity :12:2006 EXPLORER

Excuse me, but several of my friends and neighbors work in the western Colorado gas industry, and all of them are of working coalbed methane. Yes, there is tight sands drilling in Piceance Basin and areas of Garfield County, but there is plenty of coalbed drilling elsewhere in western Colorado. By the way, the report in the link mis-identifies Rio Blanco County as Rio Grande County--so much for proofreading and editing accuracy.

[esya]

My friends who were Colorado School of Mines graduates (and oil and gas, etc--energy) used to say the cycle was about 9 years, and I think that's been pretty true as long as I have lived in Colorado, since 1972.

[multitrak]

Originally Posted by jazzlover

Excuse me, but several of my friends and neighbors work in the western Colorado gas industry, and all of them are of working coalbed methane.

nope, not in nw colorado...the piceance creek basin (colorado) and green river basin (wyoming) RESERVOIRS are tight gas sands; such as the sandstones in the mesaverde formation among others. the SOURCE rocks are thin coals and carboneous shales. most new drilling and proposed new drilling in nw colorado (i.e., roan plateau) is for gas in low permeability sandstones. i'm looking at a recent ihs/pi drilling and completion report that tells me so.

<snip> but there is plenty of coalbed drilling elsewhere in western Colorado.

coalbed methane is hugely exploited in the san juan basin (new mexico) and in colorado (northern extension of the sjb) s and se of durango, mainly on the ute indian reservation. but i wasn't writing of that. new areas gaining cbm exploration and development momentum are in the powder river basin (ne wyoming, se montana), uinta basin (ne utah), and raton basin (ne new mexico). the estimated cbm reserves in the piceance creek and green river basins are an order of magnitude less than gas reserves in tight gas sands.

[multitrak]

Originally Posted by esya

My friends who were Colorado School of Mines graduates (and oil and gas, etc--energy) used to say the cycle was about 9 years, and I think that's been pretty true as long as I have lived in Colorado, since 1972.

when oil busted from $30 to below $10/bbl in early 1986 pretty much torpedoed any significant new onshore drilling in the lower 48 for at least a decade. most major companies pursued offshore prospects in foreign countries while onshore independents died on the vine. the best way to define the cycle is by charting the onshore rig utilization rate.

[jazzlover]

Originally Posted by multitrak

nope, not in nw colorado...the piceance creek basin (colorado) and green river basin (wyoming) RESERVOIRS are tight gas sands; such as the sandstones in the mesaverde formation among others. the SOURCE rocks are thin coals and carboneous shales. most new drilling and proposed new drilling in nw colorado (i.e., roan plateau) is for gas in low permeability sandstones. i'm looking at a recent ihs/pi drilling and completion report that tells me so.



coalbed methane is hugely exploited in the san juan basin (new mexico) and in colorado (northern extension of the sjb) s and se of durango, mainly on the ute indian reservation. but i wasn't writing of that. new areas gaining cbm exploration and development momentum are in the powder river basin (ne wyoming, se montana), uinta basin (ne utah), and raton basin (ne new mexico). the estimated cbm reserves in the piceance creek and green river basins are an order of magnitude less than gas reserves in tight gas sands.

There is also CBM exploration and drilling going on in west central Colorado--unless my neighbor is lying to me and going to the bar every day with his company truck instead of working. There is also substantial CBM drilling starting up in Carbon County in Wyoming and extending down into Moffat County in Colorado. I've seen those rigs working firsthand. And, yes, I do know the difference between a deep well rig and a CBM drilling rig. And, not to make too fine of a point of it, but ALL of that drilling, CBM and deep well, in western Colorado is at least partly within the economic sphere of Grand Junction. I have seen Grand Junction-based service rigs, etc. all the way from southwestern Wyoming to northwestern New Mexico, and everywhere in western Colorado.

[sterlinggirl]

Nevada,

The problem with western Colorado is that it doesn't have any other industry to fall back on when the boom does end. This causes a lot harder bust than you see in other areas because there are no other employers to soften the blow.

[multitrak]

There is also CBM exploration and drilling going on in west central Colorado--unless my neighbor is lying to me and going to the bar every day with his company truck instead of working. There is also substantial CBM drilling starting up in Carbon County in Wyoming and extending down into Moffat County in Colorado.

nope...again! the facts are facts...there is NO "substantial" cbm drilling in moffat county, either now or last year. a cursory look at the COGCC approved drilling permits indicate that out of the 86 wells approved thus far (01/2007 to 02/2008), only 5 wells have coal (cbm) as the primary pay zone while the rest of the wells (81) have tight sandstone as the primary target. outside of moffat county, there is simply little or no evidence of primary cbm drilling in the well permits, however, nearly all the drilling in nw colorado is tight gas sandstone development and a very small amount of infill drilling in previously discovered oil and field fields. also, i looked at all the approved well permits in garfield county during the same time period, but i did not find coal (cbm) listed as a primary target. i don't know where you got your information regarding drilling activity in nw colorado, but it appears to be wrong. it would help to know the source of your information other than that procured from a neighbor. my best guess is that the service companies and their personnel are calling everything cbm when it's really not. obviously a geologist would make the distinction between tight sandstone and coal when in the field or office. btw, the tight sands can be found at shallow depths too.

And, not to make too fine of a point of it, but ALL of that drilling, CBM and deep well, in western Colorado is at least partly within the economic sphere of Grand Junction. I have seen Grand Junction-based service rigs, etc. all the way from southwestern Wyoming to northwestern New Mexico, and everywhere in western Colorado.

whatever...observing from the road is not the same as being on the rig floor and in the doghouse to know and understand what's going on. i suspect that a lot of rigs are coming in from all over the region given that there are thousands of well permits outstanding in the area. gj doesn't have enough rigs to drill, complete, and service all those wells. i suspect the drilling companies based in farmington, nm mostly drill and complete cbm wells around durango and in the san juan basin, while the ones in vernal, utah, are catching contracts in the uinta basin. when you're developing a gas reservoir on 10 acre spacing, then that's a heck of a lot of wells that have to be drilled!

to the op nevada, here's my point...when the tight gas sand drilling phase is concluded, which may be decades into the future, all those thousands of producing wells will need to be serviced, meaning ongoing economic activity for gj as long as natural gas prices remain at present levels and higher. and when the wells reach the end of their productive lives, environmental remediation will definitely be a big business, especially if the shallower fresh water aquifers are contaminated with saline water from the formerly producing reservoir. i know that that's a huge concern now on the ute and private lands around durango.