As economy turns, county focuses on present and future | CraigDailyPress.com
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As economy turns, county focuses on present and future

Collin Smith

What is known: applications for permits to drill in Moffat County are down this year.

What is unknown: what that decline means for Moffat County.

In Moffat County, energy companies filed 136 applications in 2006, another 74 in 2007, then 57 in 2008 and six this year, as of Tuesday.

“It kind of seems like they took a dive, doesn’t it?” said Jeff Comstock, Moffat County Natural Resources Department director.

In prior years, Comstock said that declining trend would be simple to analyze. Not so much anymore.

“Three years ago, I’d have sat here and told you it meant less revenue in the future,” he said. “Now, I don’t know. It’d be easy to look at these numbers and say, ‘Well, they’re down, that’s bad for the county.’

“There’s so many more factors, that’s hard to say.”

The natural gas market is among the most volatile in the country, Comstock said. Since the county’s tax revenue depends on the selling price of gas, it rides the same up and down waves.

What the decline does suggest is that companies aren’t willing to spend extra money on exploratory projects, which account for the vast majority of drilling operations in the county, Comstock said.

With the economy down, cash hard to come by and companies having to sell for low prices in the Rocky Mountain region, there isn’t much incentive for industry to go anywhere but where there are large, proven quantities of resources, Comstock said.

“It doesn’t help any that Oklahoma, Pennsylvania and Texas have opened up with these huge gas shale areas,” he added. “People go where the money is easy.”

A possible exception to Moffat County’s reputation as an exploratory region is the Hiawatha area northwest of Craig. Companies have been drilling there since the 1940s, Comstock said.

Perhaps not coincidentally, Wexpro, which holds several leases in Hiawatha, accounts for more than 20 of the 27 pending drilling permits in the county, he added.

Drilling applications, however, only predict the future of drilling.

The economy is to the point where the future isn’t Commissioner Tom Gray’s biggest concern. He worries whether the present state of the industry will hold.

The natural resource industry – such as oil and gas companies, but not including the Tri-State Generation & Transmission power plant – accounted for 33 percent of the county’s total property taxes in 2008, and Gray expects them to continue to be a key part of the local economy.

But, he has reason to be uneasy about the immediate future.

“We know that the selling price is way less, and we’ve had input from some companies that they’ve shut down a lot of their production,” Gray said.

Less gas being sold for lower prices would be a double whammy on the county’s tax base, he said, but it probably wouldn’t be felt until 2010 or 2011. Companies pay taxes on natural gas two years after the product is sold.

The county should know June 5 what kind of hole 2010 sits in. That is when the Moffat County Assessor’s Office plans to finish compiling tax data submitted by natural gas companies last month.

The reduction in drilling permits still is an important issue the county will watch, Gray said, but the focus now is for the county to keep what it has.

“When we were in a growth mode two years ago, we were looking at that as future revenue and future growth,” he said. “That issue isn’t any less important. The reason you hear us focusing more on production now is because we’re in a mode where we have to watch our revenue streams.”

Collin Smith can be reached at 875-1794 or cesmith@craigdailypress.com.


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