Category: Natural Resources

Colorado’s Natural Gas Production Declines in 2013

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In 2013 Colorado’s Coal bed methane and natural gas production declined by 5.8%, from 1.7 billion Mcf to 1.6 billion Mcf. The 2013 level of production is similar to 2009. Twenty-six of Colorado’s 38 counties that produce gas posted declines last year.

Three counties account for 81.3% of total production: Garfield, La Plata and Weld.

In 1999 production in Garfield County was 56.9 million Mcf. It rose to 700.1 million Mcf in 2012, but dropped off to 649.3 million Mcf in 2013.

La Plata County has been a leader in production since 1999. In 2003 production peaked at 473.4 million Mcf and has declined gradually since. In 2013 it has fallen to 356.5 Mcf.

Weld County has experienced steady growth between 1999 and 2013, rising from 127.7 million Mcf to 271.8 million Mcf.  Unlike Weld and La Plata counties, Weld County showed solid growth in 2013.

The combined total of the other 35 counties has grown gradually from 1999 to 2013, from 145.1 million Mcf in 1999 to 355.3 Mcf in 2013.

Colorado has 26 counties where there is no gas production.

Natural gas production remains strong in Colorado
Despite the decline in 2013, natural gas production remains strong.

 

©Copyright 2011 by CBER.

Can You Say Boom in Oil Production for Weld County?

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When you mention Greeley, Colorado some people think of the smell of money (the feedlots), others think of the Greeley Stampede, and some are reminded of their days in college at the University of Northern Colorado.

More recently, Greeley has gained notoriety as the leader of the state’s boom in oil production. In 2013 Weld County accounted for 81% of production for the state.

Between 2008 and 2013 oil production has almost tripled in Weld County, increasing from 17.6 million barrels to 51.9 million barrels. For this six year period, production at the state level more than doubled, rising from 29.6 million barrels to 64.1 million barrels.

Between 1999 and 2013 the total oil production for Rio Blanco and Garfield County was unchanged at 6.8 million barrels; however, production in this area was volatile during that period. In 2013 the combined total production of these two counties was the second largest for the state.

Between 1999 and 2013 oil production in the other 33 counties declined from 6.4 million barrels to 5.3 million barrels. Within this period, these 33 counties experienced significant volatility. Production increased in 14 counties, but decreased in 19.

Colorado has 28 counties where there is no oil production.

Boom in Oil Production for Weld County
Colorado Oil Production By Top Counties. Growth led by Weld County

 

 

 

 

©Copyright 2011 by CBER.

Grand Junction and Greeley – Boom and Bust

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Energy is a mixed blessing (boom and bust) to local economies in Colorado, specifically Grand Junction and Greeley.

Since 1991, the Grand Junction MSA has added jobs at an annualized rate of 2.4% compared to 2.0% for the state.

Mesa County enjoyed strong growth in the first part of the 2000s because of the oil and gas industry. Unfortunately, it also experienced a bust in 2009.

The Grand Junction MSA employment has not returned to the peak level of 2008.

 boom and bust

 

Since 1991, the Greeley MSA has added jobs at an annualized rate of 2.9% compared to 2.0% for the state.

Similar to Mesa County it experienced a boom as a result of exploration in the Niobrara gas fields.  As well, the local economy benefitted from a Vestas turbine factory. While the county experienced a downturn in conjunction with the Great Recession, Greeley MSA employment returned to the peak level of 2008 in January 2012.

Despite the boom and bust cycles, both communities have experienced a stronger rate of growth over the past two decades than the state.
boom and bust

 

©Copyright 2011 by CBER.

Eight of Top Ten States for Proved Oil Reserves Added Jobs at a Faster Annualized Rate than the U.S.

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Between 2007 and 2012, the annualized rate of change in U.S. wage and salary  employment was -0.6%.

Only 2 of the top 10 states for proved oil reserves were worse – California (-1.0%) and New Mexico (-1.0%).

Colorado (-0.2%) and Utah (-0.1%)posted slight annualized job losses. Wyoming (0.1%), Louisiana (0.1%), and Oklahoma (0.2%) experienced slight annualized job gains.

Texas posted annualized gains of 0.9%, Alaska was 1.1% and North Dakota was 3.7%.

Eight of the states grew at a rate faster than the U.S., while 6 posted positive gains.

The extractive industries played a key role in the growth of the economy during the recovery.

©Copyright 2011 by CBER.

Proved Oil Reserve Leaders have Lowered Their Unemployment Rate Faster than U.S., Except for Colorado and California

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In 2007 nine of the top ten states for proved oil reserves had an unemployment rate lower than the U.S. rate.

In 2012, nine of these top ten states had an unemployment rate lower than the U.S. rate, although the Colorado rate was lower by only 0.1 percentage points.

For the U.S., the gap between the 2012 and 2007 unemployment rate was 3.5 percentage points (8.1% – 4.6%).  The percentage point gap for the top 10 states with proven oil reserves is:

  • 5.1 California
  • 4.2 Colorado
  • 3.4 New Mexico
  • 3.1 Utah
  • 2.6 Wyoming
  • 2.4 Texas
  • 1.7 Louisiana
  • 1.1 Oklahoma
  • 0.9 Alaska
  • 0.0 North Dakota

In other words, the economies in 8 of the 10 leading oil reserve states experienced faster reduction in unemployment rates, presumably in part because of the growth in the extractive industries. California and Colorado are the exceptions. For the state of Colorado, it is reasonable to ask the question, “Is Colorado’s high gap a result of more stringent regulation and growing opposition to fracking?”

©Copyright 2011 by CBER.

Colorado – Leader in Extractive Industries

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About 94% of the U.S. proved oil reserves are located in 10 states, including Colorado. The state is ranked 9th with 423 billion barrels, well behind Texas, with 7,014 billion barrels.

Eighty-nine of the country’s 139 refineries are located in the top ten states for proved oil reserves… Sixty-two refineries are located in Texas, Louisiana, and California. Colorado has two refineries.

Colorado is a leader in the extractive industries, which has also made it a focal point for opposition to the industry.

©Copyright 2011 by CBER.

Policy and Prices Impact Output for Extractive Industries – Is Colorado Closed for Business?

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The extractive industries are an important and visible part of Colorado’s economy. In 2012, Colorado’s GDP was 1.76% of the U.S. GDP and Colorado’s Mining sector output was 3.58% of the U.S. Mining sector output.  In other words, Colorado’s extractive industries critical components of both the state and the national economy.

Between 1997 and 2012, there were stark differences in the state and national output for the extractive industries and the private sector.

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.3% and the extractive industries were -0.6%.
  • The compound growth rate for Colorado Private Sector Real GDP was 3.1% and the extractive industries grew at a rate of 3.6%.

Nationally sector output trended downward from 1997 to 2005 and trended upward from 2005 to 2009. Between 2009 and 2012, sector output trended downward again.

In Colorado sector output  trended upward from 1997 to 2009; however, it has trended downward since 2009.

  • The annualized rate of growth for U.S. Private Sector Real GDP (sum of all states) was 2.5% and extractive industry output was -2.0%.
  • The compound growth rate for Colorado Private Sector Real GDP was 2.2% and extractive industry output was -4.0%.

The variance in output has been caused by changes in prices, supply and demand, and policy. Recently, the latter has had the most detrimental impact on the industry in Colorado.  Policy and anti-fracking efforts are likely to further suppress output in the months ahead. In addition to reducing output, this will create the perception that Colorado is not a business-friendly state.


©Copyright 2011 by CBER.

Goods Producing Sectors Poised to Add Jobs this Year

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Companies are divided into two categories: Goods Producing sectors and Service Producing sectors. In simplistic terms: you make stuff or you do stuff.

One of the reasons the Goods Producing category is important is that many primary jobs are in these sectors. The NAICS categories include the Extractive Industries, Construction, and Manufacturing.

Only twice (1997 and 1998) since 1990 have all three sectors added jobs in the same year. At the midpoint of 2012, the trio are in a position to show gains for this year also. Previously the gains were a result of an economy hitting on all cylinders. This time the gains will occur because of an economy that has misfired and the sectors have nowhere else to go but up. They are playing a small, but extremely important role in the recovery.

For additional details on the Colorado economy click here or go to https://cber.co/.

©Copyright 2011 by CBER.

Colorado’s Bottom-Up Economic Development Strategy

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The first week in February Governor Hickenlooper (call me “John”) hosted the ninth stop in his Bottom-Up Economic Development tour across Colorado. For about two hours, the region’s top economic developers discussed job creation, economic development, and steps for increasing government efficiencies.

The most frequently discussed topic was transportation and the top priority was to complete FasTracks in a timely and cost effective manner. In addition leaders made a case for completion of the final leg of the beltway (between Broomfield and Golden) around the city, expansion of commercial air, maintenance of our bridges and highways, and reduction of congestion along I-70 into ski country.

Panelists felt that innovation and the attraction/retention of primary jobs was critical if we are to maintain our regional and national competitiveness. They also cited the need to have a well-trained workforce and an efficient, accountable, and adequately funded education system. As well, it is imperative that Coloradans work together to maintain the quality of life that makes the state so attractive. This will require leaders to address issues related to our water supplies, develop parks and recreation areas, invest in infrastructure, and utilize the state’s unique assets to attract commerce.

The metro area’s economic diversity was evident as leaders spoke in support of industries and clusters endemic to their region. For example, they addressed the need for the state to be more “military-friendly”, consider construction of nuclear power plants, understand the importance of refineries, realize the value of our construction and extractive industries, and support gaming and tourism.

As the Bottom-Up discussions continue, it would be beneficial to reflect on past economic-development successes. For example, consider the public-private partnership, the former Colorado Advanced Technology Institute (CATI). During the late 1980s, CATI was established to guide the development of science and technology and the growth of select high-tech clusters. Specifically, the group’s work laid the groundwork for the state’s photonics, materials, hardware, software, telecommunications, and bioscience clusters. While it may not be appropriate to resurrect CATI as it existed, there is merit in having the an organization that would fill many of CATI’s roles in fostering long-term growth.

Four years ago, a state job cabinet was formed, town meetings were held across the state to gather input, and plans were put in place. While that effort was well intended, it did not have the desired impact. Hopefully this Bottom-Up Planning approach with be more successful.

A well-thought out economic development plan couldn’t come at a better time. Colorado employment remains below the 2001 peak and it will be years before state payrolls return to the pre-Great Recession high mark.

©Copyright 2011 by CBER.

Job Losses Expected in 2011 – State Demography Office

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The 2010 Annual State Demography Meeting kicked off on a somber note, when staff economist David Keyser;  announced that the state’s recovery from the Great Recession will be painfully slow.

Some of the key points from Keyser’s review of the past year (2010) were:
• Job gains occurred in health care, government, and education.
• Ongoing losses in manufacturing continue to hinder the recovery because they have a high multiplier effect.
• Low wage jobs were hit harder.
• Access to credit provided a challenge for many companies.
• Small businesses saw significant setbacks.
• Rural counties that relied on oil and gas or tourism (such as the Western Slope) suffered greater losses, while agriculture-based economies were more stable.
• The loss of basic jobs, such as manufacturing, will have a long-term effect on the state because these jobs are likely to be relocated elsewhere.
• On the other hand, the loss of non-basic jobs, such as retail, food and beverage, or personal services will return in the same location.
• Colorado will remain a popular place to live and work and net migration will remain positive, but slightly below previous years.

Looking ahead, key points from Keyser’s presentation for 2011 were:
• Non-farm wage and salary employment will decline slightly and a best case scenario is that it will be flat. Wage and salary job losses should not exceed 22,000 (1%).
• Agriculture and small businesses are likely to post a slight increase, offsetting declines in wage and salary employment.
• Construction won’t come back in the immediate future.
• Health care will continue to add jobs.
• Colorado will continue to be closely tied to the US economy.
• Many of the effects of the 2007 recession could be permanent.

Keyser’s forecast for 2011 is slightly lower than what cber.co projected in late October, but the basic analysis of the current state of the economy is similar.

©Copyright 2011 by CBER.