Colorado Extractive Industries Update: Record Oil Production and Rebounding Employment

In 2017, Colorado oil production reached a record high at 131.1 million barrels, natural gas production edged up to 1.71 trillion cubic feet, and coal production increased by 2.5 million tons to 15.2 million from 2016. Mining employment rose by 1,700 workers in 2017, but it remains 8,800 below the 2014 peak employment level.

Crude Oil

Crude oil production in 2017 reached a record 131.1 million barrels, according to the Colorado Oil & Gas Conservation Commission (COGCC). With an increase of 14.6 million barrels from 2016, Colorado had the 3rd most absolute growth of oil production from 2016 to 2017 after Texas (+106.7 million barrels) and New Mexico (+26.8 million barrels). Colorado accounted for 3.8% of all oil produced in the United States and was the 7th largest oil producing state in 2017 – trailing only Texas, North Dakota, Alaska, California, New Mexico and Oklahoma.

In 2007, Colorado produced 26.2 million barrels of oil and was the 11th largest producing state accounting for 1.4% of the nation’s production. Since 2007, Colorado has ridden the wave of increased oil production from tight rock formations (aka shale) that has led to an 83% increase in U.S. crude oil production over the past decade. Colorado’s petroleum production is up 400% between 2007 and 2017, trailing only to North Dakota’s 767% increase. Nearly all of the increased oil production in Colorado since 2007 can be attributed to nearly exponential growth in production in Weld County, as can be observed in Figure 1. Weld County accounted for 91% of Colorado’s 2017 oil production.

Figure 1

Source: http://cogcc.state.co.us/COGCCReports/production.aspx?id=MonthlyOilProdByCounty

Employment

According to the Total Estimated Employment series computed by the State Demography Office, mining employment in Colorado rose 1,700 or 6.1% in 2017. The number of people working in mining in Colorado fell 10,400 from 2014 to 2016, but the industry employment reversed course in 2017 as rising oil prices help to spur more drilling activity. A time series of mining employment from 2000 to 2017 is shown in Figure 2.

Figure 2

Source: https://demography.dola.colorado.gov/economy-labor-force/data/jobs-by-sector/#jobs-by-sector-naics

Natural Gas

Natural gas production totaled 1.708 trillion Mcf of in 2017, coming in just shy of the record production of 1.724 trillion Mcf set in 2012. Colorado accounted for just over 5% of the U.S. natural gas production and was the 8th largest producing state in the U.S. in 2017.

Large amounts of associated gas coming from oil drilling operations in Weld County allowed it to overtake Garfield County as the largest producer of natural gas in Colorado in 2016. Weld produced 679 million Mcf of natural gas in 2017 and accounted for 40% of statewide production, marking a three-fold increase from 2010 when it comprised 13% of statewide production. Natural gas production in Garfield County has declined by 31% over five years, falling from over 700 million Mcf in 2012 to 481 million Mcf in 2017. As a result of the declining production, Garfield County’s share of Colorado’s total gas production has decreased from 41% to 28% over the past 5 years. La Plata, Las Animas, and Rio Blanco counties have seen their gas production fall substantially from 2012 to 2017 as shown in Figure 3 below.

Figure 3

Source: http://cogcc.state.co.us/COGCCReports/production.aspx?id=MonthlyGasProdByCounty

Coal

Coal production fell both in Colorado and nationally from 2012 to 2016 as increased natural gas production helped drive down the cost natural gas. Lower gas prices combined with lower emissions from gas-fired plants caused many utilities to shift from coal to natural gas for electricity generation. This shift has resulted in lower demand for coal and a substantial decline in the number of active coal mines and coal production. In 2012, Colorado had eleven operating coal mines located in nine counties which employed 2,300 miners and produced 28.6 million tons of coal. By 2016, only seven coal mines operated for the full year and statewide production fell by 55% from the 2012 level to 12.8 million tons as shown in Figure 4. In 2017, Colorado produced 15.2 million tons of coal, an increase of 18% from one year ago; however, only 1,100 miners were employed in Colorado’s coal mines during the past year. Nationally, coal production edged up by 6% to 773 million tons in 2017; Colorado comprised about 2% of all U.S. coal production last year.

Figure 4

Source: Department of Natural Resources, Division of Reclamation Mining & Safety

Rural Response, Recovery & Resiliency (4R)

In the past 6 years, Gunnison County lost the Oxbow mine, Delta lost its Bowie #2 mine, Las Animas saw the New Elk Mine shuttered and Montrose experienced the closure of the New Horizon Mine. These closures contributed to the loss of 1,200 coal mining jobs from 2012 to 2017. The Rural Response, Recovery & Resiliency (4R) program located within the Colorado Department of Local Affairs (DOLA) has been spearheading work with other state and Federal agencies to assist the counties that have been impacted by the loss of coal mines and other metal mining employment helping to diversify their economies and provide employment opportunities for displaced workers.

Visit this link to learn more about the 4R program: https://www.colorado.gov/pacific/dola/rural-response-recovery-and-resilience-4r-program

Want to know more? Visit our website at demography.dola.colorado.gov or send questions to dola_dlg_helpdesk@state.co.us

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