The Future of the Colorado Energy Sector
Energy businesses in Colorado had a successful 2015, even though the oil industry as a whole saw prices drop considerably.
Energy businesses in Colorado had a successful 2015, even though the oil industry as a whole saw prices drop considerably. Heading into 2016, there are concerns the state's companies may feel the impact of this decline in prices, which could in turn have a direct impact on production.
According to the most recent data from the U.S. Energy Information Administration, Colorado produced 334,000 barrels per day of crude oil in 2015, a jump from the 291,000 barrels per day the state generated the year prior. The 15 percent rise in production was one of the largest increases in the entire country, and an outlier to the Rocky Mountain region. Nearby states such as Utah, Wyoming and Montana all saw declines in crude oil production, though some saw much greater drop-offs than others.
The strong performance of Colorado's oil businesses was mainly attributed to Wattenberg Gas Field, a booming area for the energy sector, located in Weld County in the northern part of the state. The region is home to many businesses, both established and new, driving the state's oil production. Many of those companies are optimistic they will continue their strong production numbers into 2016, as there is a belief the energy sector around the state could again be strong. However, there is also some worry for several of Colorado's top businesses that the coming year could be one of decline in terms of oil and gas production because of a national shortage of the important resource.
Unsteady future ahead
Though the end-of-year numbers were strong, it wasn't all positive for many of Colorado's leading oil and gas companies. Multiple business were forced to downsize their staff in 2015, moves that could translate to decreased production moving forward. According to the Denver Post, Noble Energy - the state's second-largest oil producer - had nearly 200 layoffs in 2015. Meanwhile two companies filed for bankruptcy during the year, and a third - Encana - had its Colorado assets sold to a Denver-based conglomerate in October.
With all of the changes, there is fear that many executives already know that gas and oil are drying up around the state. These moves may have been made in anticipation for a step back in 2016. The EIA issued it's national crude oil projection for the coming year in December and warned of possible declines in production.
"EIA's crude oil price forecast remains subject to significant uncertainties as the oil market moves toward balance," the EIA outlook stated. "During this period of price discovery, oil prices could continue to experience periods of heightened volatility. The oil market faces many uncertainties heading into 2016."
There are some Colorado energy companies that do not appear worried about the potential problems. Oil & Gas 360 reported that PDC Energy, based in Denver, is projecting growth of at least 35 percent in 2016. If they are able to accomplish that and some other energy businesses in the state can do the same, the year could be another successful one for Colorado's oil and gas production.
Vectra is proud to bank many businesses in Colorado's energy industry. Learn more at vectrabank.com.