US says Colorado has 40 times more natural gas than thought

Dan Elliott, Associated Press

Western Colorado has 40 times more natural gas than previously thought, but an immediate boom is unlikely because of low gas prices, government and industry experts said Wednesday.

In this March 29, 2013 file photo, workers stand atop water tanks while they help keep an eye on water pressure and temperature, at an oil and natural gas extraction site, outside Rifle, on the Western Slope of Colorado. Federal geologists say western Colorado has about 40 times more natural gas than previously thought, and an industry spokesman says it’s enough to make it the second-largest formation in the country. The U.S. Geological Survey said Wednesday, June 8, 2016 that the Piceance Basin formation is believed to hold 66 trillion cubic feet of gas, up from 1.6 trillion in a 2003 estimate. (AP Photo/Brennan Linsley, file)

DENVER (AP) — Western Colorado has 40 times more natural gas than previously thought, but an immediate boom is unlikely because of low gas prices, government and industry experts said Wednesday.

The U.S. Geological Survey said the Mancos Shale formation in Colorado's Piceance (PEE'-yahns) Basin holds about 66.3 trillion cubic feet of gas, up from 1.6 trillion estimated in 2003.

USGS cited data from commercial drilling companies and new research for the revision.

A trillion cubic feet of natural gas is enough to heat 15 million homes for a year, the U.S. Energy Department says.

David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, said he doesn't expect a rush to drill in western Colorado because current natural gas prices are too low. If prices rise significantly, companies would likely begin drilling, he said.

The U.S. also needs more facilities to export natural gas to Pacific nations to help make the Colorado gas competitive, Ludlam said, citing the proposed Jordan Cove Liquid Natural Gas terminal at Coos Bay, Oregon.

The Piceance Basin, which spans much of western and northwestern Colorado, already has multiple well sites, pipelines and processing plants in place from a previous round of drilling in a shallower formation, Ludlam said.

Much of the basin is federal land managed by the Bureau of Land Management, and getting approval from the BLM to drill is often more difficult than getting private landowners to agree, said Kathleen Sgamma of the Western Energy Alliance, an industry group.

"I hope with this reassessment the government understands that indeed the Mancos Shale is an important formation that should be developed responsibly," she said.

Neither BLM nor USGS officials immediately returned calls Wednesday.

The new estimate could mean the Piceance Basin has the second-largest natural gas reserves in the country, after the Marcellus Shale formation in Pennsylvania and neighboring states, Ludlam said.

USGS says the Marcellus has 84 trillion cubic feet of gas.

More important than the volume of the reserves is the cost of extracting them, said Porter Bennett, an energy analyst and president of Ponderosa Advisors in Denver.

Bennett said the Piceance Basin has traditionally had high drilling costs, but Ludlam said the next wave of energy companies with leases in the area likely would have lower costs than previous operators.

Drilling companies will use hydraulic fracturing, or fracking, to recover the gas from the Mancos Shale, Ludlam said.

Fracking uses a mix of water, sand and chemicals under high pressure to force open underground formations and release oil and gas. Opponents say fracking poses a risk to public health and the environment but the industry says it is safe.

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