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Facts & Figures
Oil was discovered in Colorado in 1860 outside Canon City. Twenty years later the first well was drilled near Florence, Colorado primarily producing kerosene for lighting fuel.
In 2000, Colorado ranked 10th of all states in daily crude oil production and 6th in natural gas production.
In 2000 Colorado produced 17.3 million barrels of oil. 2000 oil volumes declined almost 10% from 1999 levels representing a continuing decline in Colorado's oil production which began in 1977. No major new oil discoveries have been made in Colorado since that time. Colorado producers have been able to achieve a nearly flat production rate through careful hydrocarbon reservoir management. Natural gas produced in 2000 totaled 355 billion cubic feet (bcf) (not including coalbed methane) continuing a 13-year trend of increased gas production in the state. The steady increase in natural gas production can be attributed to increased wellhead prices, discovery of abundant domestic reserves and the inherent environmental benefits of natural gas. The state's natural gas production will undoubtedly continue to rise because of the interest in Western Colorado's Piceance Basin. Conservative estimates rate the Piceance Basin's potential resource at 31 trillion cubic feet of natural gas, the largest gas discovery in the Rocky Mountain region. Colorado produced 385 bcf of coalbed methane (CBM) in 2000 representing 52% of the state's total gas production. For the first time, Colorado placed 1st in the U.S. in CBM production surpassing New Mexico which has held the lead for the past decade. Tax credits to explore for CBM, defined as "unconventional gas reservoirs", were available in the late1980s and early 1990s. Although the tax credits supplied the initial economic impetus to explore for coalbed methane gas, improvements in drilling and completion technologies have sustained the profitability of the resource. Oil and gas wells are located in 42 of Colorado's 63 counties. The top three counties in oil production are Rio Blanco, Weld and Cheyenne. La Plata, Weld and Garfield counties lead the state in natural gas production.
In 2000, crude oil prices climbed as high as $40 per barrel, the highest level in a decade. The annual average price for a barrel of crude settled at $24. 2000 natural gas prices peaked to over five times 1999 levels with the annual average price resting at $3.11 per thousand cubic feet. Coupled with increasing demand for natural gas because of an unusually cold winter, the price spikes presented financially compelling reasons to explore for natural gas resources. The rise in both oil and natural gas prices led to a surge in drilling permit applications for both coalbed methane and crude oil. In 2000, the COGCC reported the filing of 1,529 drilling permits, a 50% increase from 1999 levels.
Total production value in 2000 for oil, gas and carbon dioxide in Colorado was $2,830 million. Oil valuation totaled $400 million, natural gas $2,350 million and carbon dioxide $80 million. The total production value for the same commodities in 1999 was $1,909 million. The 2000 rise in production value was primarily the result of higher wellhead oil and gas prices.
Proven natural gas reserves in Colorado were estimated at 8,987 bcf at the beginning of 2000 a 14% increase from the previous year. Colorado is ranked 7th in proven natural gas reserves. Proven crude oil reserves at the beginning of 2000 were estimated at 212 million barrels. Colorado is ranked 11th in crude oil reserves. The major fields in the state include the Denver, Raton, Piceance and San Juan Basins.
Two refineries operate in Colorado. Conoco's Commerce City refinery, founded in 1929, has a throughput capacity of 58,000 barrels of crude oil a day. The refinery supplies a full range of petroleum products excepting motor oils. Recently, in a joint venture with Koch Industries, the refinery began producing high quality asphalt products. Ultramar Diamond Shamrock also operates a refinery in Commerce City. Originally built in 1937, the refinery has a throughput of 28,000 barrels of crude oil per day. It strictly produces fuels; not chemical feedstocks, lube oils or asphalt. Both refineries have spent hundreds of millions of dollars in upgrades over the past several years to comply with environmental regulations and to improve manufacturing capabilities.
Tax revenues collected from 2000 oil & gas production totaled approximately $161 million:
By law, 50% of the severance tax revenue flows to local governments and 50% to the state Severance Tax Trust Fund. Colorado's highway motor fuel taxes resulted in total receipts of $518 million in 2000. The state collects 22¢ per gallon on gasoline, 17¢ per gallon on gasohol and 20.5¢ per gallon on diesel fuel. 13 states have higher gasoline tax rates than Colorado. 60% of state taxes collected go to the State Highway Fund to be used by various agencies within the Department of Natural Resources to replace depleted natural resources, complete water projects and promote the mineral and mineral fuel industries. A federal tax of 18.3¢ per gallon is also collected on the sale of gasoline (13¢ per gallon on gasohol and 24.30¢ per gallon on diesel).
In 2000, oil and gas extraction employment averaged 7,200 jobs. This represents an increase of just 2% from 1999. Corporate cutbacks and company mergers prevented petroleum companies from boosting their hiring levels commensurate with the increases in price and natural gas production levels.
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Colorado
Petroleum Association | 1580 Lincoln Street, Suite 1125, Denver, CO | 80203
Phone: 303-860-0099 | Fax: 1-866-666-9657 | Email: stan@coloradopetroleumassociation.org