By Aldo Svaldi – The Denver Post – March 23, 2015
Half of Colorado’s drilling rigs have gone idle since the end of October, the sharpest percentage decline among the country’s major oil producing states, according to a report Monday from IHS, a data analysis firm based in Douglas County.
IHS, however, is only calling for a 26 percent cut in capital spending by oil and gas companies active in the state this year, which lines up with the percentage drops forecast in North Dakota, New Mexico and Texas.
“What happens is you idle the least productive and most costly rigs,” said Philip Verleger, president of the Carbondale-based energy consulting firm PKVerleger LLC. “Its like how an airline will ground its older, less efficient planes first.”
Colorado’s rig count fell from 75 on Oct. 31 to 39 on March 6, a 48 percent decline. IHS predictscapital expenditures on oil and gas wells in the state will fall from $7.4 billion last year to $5.5 billion this year.
“The falling rig counts are too recent to show up yet in the state economic data, but their impacts will appear as the year progresses,” IHS said.
North Dakota will take the hardest hit, with its economy shrinking 1 percent, a sharp reversal from growth rates for 2015 approaching 3.5 percent that IHS had forecast for the state last fall.