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GRAND JUNCTION, Colo. — A good chunk of the Midwest and East Coast is frozen under a sheet of ice, which should mean a dream winter for the natural gas industry as people crank up the heat in their homes.
But it’s not, according to one local expert.
It’s just the opposite.
In response to an apparent natural gas shortage a few years ago, the industry ramped up its exploration efforts and has, in essence, worked itself out of a job.
“The industry did one hell of a job exploring gas the past four years across the country,” said Carter Mathies, partner of Arista Midstream Services LLC, which is based in Golden.
“We addressed the decline and have now oversupplied the country,” he said. “We’re our own worst enemy.”
Mathies spoke to a roomful of local Realtors Thursday at the quarterly Grand Junction Area Realtor Association Membership Luncheon at Two Rivers Convention Center.
From an industry standpoint, thank goodness they’re freezing out east, he said. “This winter has been a blessing or else it could have been truly catastrophic.”
An oversupply of natural gas nationwide, combined with several recent discoveries of natural gas in other parts of the country has resulted in Colorado’s Piceance Basin — not long ago viewed as the final frontier of natural gas exploration in the U.S. — hitting slowdown mode.
“Any drilling right now on the Western Slope is uneconomic,” Mathies said.
He said 40 percent fewer rigs will be operating by June, and Mesa County will feel the effects of the slowdown.
Locally, he predicted:
• Declining employment.
• 2009 tax receipts back to 2006 levels.
• Lower demand for construction.
The slowdown isn’t discussed more openly by the companies themselves, Mathies said, because they’re publicly traded companies whose employees aren’t allowed to announce planned cutbacks and reductions. Their canned answer, when asked, is:
“We’re not aware of any changes.”
To get around this issue in compiling his data, Mathies said he went to individual companies operating in the area, gave them his word that he would not identify them individually, and asked them about their plans for ’09.
The data he compiled showed less than 60 rigs operating in the area by next week — down from the 102 rigs operating in September.
He estimated capital investments in area industry will be down $2 billion from what they were in 2008.
So, the good news?
Those who believed it was too much exploration, too fast in recent years will have a chance to breath as activity in western Colorado levels off.
The roads will be less crowded and there will be less damage to those roads. Labor costs will likely decrease, as will rental rates.
And natural gas is cheap.
“We have plenty of natural gas,” he said. “That’s good news for the consumer.”
Activity could begin to pick up again a little more than a year from now, but that’s not a guarantee, and it won’t likely get back to the level it’s been at the past couple of years.
“Second quarter 2010 will start to pick back up,” he said. “That assumes we have something begin to go right with our economy as a country.”
According to the company’s Web site, Mathies’ company “provides oil and gas producers with a full complement of midstream services. Capabilities include the gathering, treating and handling of natural gas, crude oil, water and condensates, and carbon dioxide sequestration.”
Mathies, who lives in Grand Junction, has sat in on several Mesa County commissioner meetings this fall, and Mesa County Steve Acquafresca introduced Mathies to the Realtors Thursday.
Acquafresca said Mathies was one of several sources the county used in developing its 2009 budget.
The county’s budget has been reduced 3 percent this year as the result of projections like those made by Mathies.
“His information caused us to be a little more conservative than we might have been,” Acquafresca said.
While he admitted to be surprised at a few of the new numbers thrown out by Mathies on Thursday, Acquafresca didn’t question the data that was shared.
“I like his candidness and honesty,” Acquafresca said. “He tells you the way he sees it whether his audience likes it or not.”
But it’s not, according to one local expert.
It’s just the opposite.
In response to an apparent natural gas shortage a few years ago, the industry ramped up its exploration efforts and has, in essence, worked itself out of a job.
“The industry did one hell of a job exploring gas the past four years across the country,” said Carter Mathies, partner of Arista Midstream Services LLC, which is based in Golden.
“We addressed the decline and have now oversupplied the country,” he said. “We’re our own worst enemy.”
Mathies spoke to a roomful of local Realtors Thursday at the quarterly Grand Junction Area Realtor Association Membership Luncheon at Two Rivers Convention Center.
From an industry standpoint, thank goodness they’re freezing out east, he said. “This winter has been a blessing or else it could have been truly catastrophic.”
An oversupply of natural gas nationwide, combined with several recent discoveries of natural gas in other parts of the country has resulted in Colorado’s Piceance Basin — not long ago viewed as the final frontier of natural gas exploration in the U.S. — hitting slowdown mode.
“Any drilling right now on the Western Slope is uneconomic,” Mathies said.
He said 40 percent fewer rigs will be operating by June, and Mesa County will feel the effects of the slowdown.
Locally, he predicted:
• Declining employment.
• 2009 tax receipts back to 2006 levels.
• Lower demand for construction.
The slowdown isn’t discussed more openly by the companies themselves, Mathies said, because they’re publicly traded companies whose employees aren’t allowed to announce planned cutbacks and reductions. Their canned answer, when asked, is:
“We’re not aware of any changes.”
To get around this issue in compiling his data, Mathies said he went to individual companies operating in the area, gave them his word that he would not identify them individually, and asked them about their plans for ’09.
The data he compiled showed less than 60 rigs operating in the area by next week — down from the 102 rigs operating in September.
He estimated capital investments in area industry will be down $2 billion from what they were in 2008.
So, the good news?
Those who believed it was too much exploration, too fast in recent years will have a chance to breath as activity in western Colorado levels off.
The roads will be less crowded and there will be less damage to those roads. Labor costs will likely decrease, as will rental rates.
And natural gas is cheap.
“We have plenty of natural gas,” he said. “That’s good news for the consumer.”
Activity could begin to pick up again a little more than a year from now, but that’s not a guarantee, and it won’t likely get back to the level it’s been at the past couple of years.
“Second quarter 2010 will start to pick back up,” he said. “That assumes we have something begin to go right with our economy as a country.”
According to the company’s Web site, Mathies’ company “provides oil and gas producers with a full complement of midstream services. Capabilities include the gathering, treating and handling of natural gas, crude oil, water and condensates, and carbon dioxide sequestration.”
Mathies, who lives in Grand Junction, has sat in on several Mesa County commissioner meetings this fall, and Mesa County Steve Acquafresca introduced Mathies to the Realtors Thursday.
Acquafresca said Mathies was one of several sources the county used in developing its 2009 budget.
The county’s budget has been reduced 3 percent this year as the result of projections like those made by Mathies.
“His information caused us to be a little more conservative than we might have been,” Acquafresca said.
While he admitted to be surprised at a few of the new numbers thrown out by Mathies on Thursday, Acquafresca didn’t question the data that was shared.
“I like his candidness and honesty,” Acquafresca said. “He tells you the way he sees it whether his audience likes it or not.”
