Oil and gas production slow but still relevant in Moffat County
Moffat County knows how important the coal industry is to local tax coffers, but oil and gas development should not go unrecognized.
Moffat County’s second-highest tax contributor is Wexpro — a subsidiary of Dominion Questar that produces natural gas exclusively for its parent company.
Wexpro currently operates over 150 wells in Moffat County, on which it paid about $2.25 million in property taxes in 2015. Severances taxes are also collected on resources produced by the wells.
Transporting all of its natural gas is the responsibility of another one of Questar’s subsidiaries — Questar Pipeline Company (QPC) — that is also active in Moffat County.
Questar spokesman Darren Shepherd said QPC has 25-mile and 40-mile sections of its pipeline running through Moffat County as well as an office facility.
In 2015, Questar was Moffat County’s 23rd highest taxpayer with $109,309 in taxes collected from the pipeline.
However, market conditions have led to a lull in exploration and production across the natural gas industry, which is noticeable in Northwest Colorado.
According to Questar’s 2015 annual financial report, “Based on current market prices for natural gas, new drilling in Wexpro’s properties under the existing agreements may be limited.”
In June of 2008, natural gas prices were around $12.50 per million British thermal units (BTUs), according to the U.S. Energy Administration.
Currently, prices sit drastically lower at around $3 per million BTU, but had dipped as low as $1.7 per million in March of 2016.
Shepherd said the market conditions from 2014 through 2016 led to a “natural decline” in Wexpro’s production but if conditions improve, normal activity will resume.
“Supply is high so prices are low… once we start to see that supply drop and prices start going up, Wexpro will begin drilling operations,” he said.
According to Questar’s second quarter financial report for 2016, the company has acquired new territory in the Vermillion Basin and plans to develop six wells in the area in 2016.
But, prices need to hit a higher mark for drilling to remain profitable, Shepherd said.
“We suspect that when market prices hit the $5 mark, we’ll start to see more drilling,” he said.
In 2015, Moffat County saw its lowest figure on oil and gas production in the last decade.
About 19.7 MCF, a unit of measure representing 1,000 cubic feet of natural gas, was produced in Moffat County in 2006, and production peaked in 2008 with 20 MCF, according to Colorado Oil and Gas Conservation Commission.
However, in 2015 only 13.6 MCF was produced, which is about 3 MCF less than the next lowest production year.
Contact Patrick Kelly at 970-875-1795 or Contact Patrick Kelly at 970-875-1795 or pkelly@CraigDailyPress.com or follow him on Twitter @M_PKelly.Contact Patrick Kelly at 970-875-1795 or pkelly@CraigDailyPress.com or follow him on Twitter @M_PKelly.
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