For the first time in decades, the market value of oil extracted from Colorado has surpassed the value of natural gas, according to a new study.
This spring, the market value of Colorado oil, as calculated for state taxes, was $351 million, compared with $243 million for natural gas, said Headwaters Economics, a nonprofit natural-resource consultant based in Montana.
“This is part of a shift we are seeing in the West,” said Mark Haggerty, a Headwaters economist.
Horizontal drilling and hydraulic fracturing are enabling producers to pull more oil from the Niobrara Shale play in Colorado and Wyoming, while at the same time, natural gas prices have plummeted.
“The boom is going to present a real fiscal opportunity for Colorado,” Haggerty said.
Hundreds of millions of dollars of severance taxes based on oil production have been paid to state and local governments here, and the amounts are likely to increase as the Niobara play attracts more out of state companies, and producers like Noble Energy and Anadarko Petroleum invest billions in new well sites and infrastructure.
The huge bonus to all of this, of course, are the number of jobs being generated by the boom.
While natural gas production has remained consistent over the last few years, its market value has fallen to about $13.54 compared to $105.74 for oil — based on the equivalency standard. Colorado oil production is 53,000 barrels a day, a 90 percent increase in three years, according to IHS Consulting.