Oil production declined in Colorado for the first time in at least 17 years, as drillers have pulled back on activity in the face of persistently low oil prices.
Per state data, 113,881,595 barrels of oil was pumped out of Colorado in 2016, a 7 percent decline compared to 2015. Even once December’s numbers are fully counted, this will still be the first-time production has declined since at least 1999. Oil production had been growing an average of 30 percent a year for most of the decade.
“It can be a little bit of a scary time for an operator,” says Phillip Dunning, an analyst with Littleton-based Drillinginfo.
Oil is trading around $50 a barrel, about half what it was in 2014. Low oil prices have caused all kinds of problems, even for wells that were producing.
“You had people basically shutting in wells for loss of revenue, and then you also had not enough new wells being brought online that it was almost a double-edged sword.”
Dunning says there weren’t enough new wells to replace the declining production in existing wells. Oil prices have stabilized at a point where it’s profitable for some operators, but drilling activity remains low.
Baker Hughes reports only 25 drill rigs operating in the state as of March 3, that’s just a fraction of the more than 70 that were operating several years ago.
The drop in Colorado seems to fall in line nationally. New numbers from the government's Energy Information Administration find that the average crude oil production (measured in barrels per day) in the Lower 48 states fell in 2016, down 6.1 percent from the 2015 average.
