Glimmers of hope seen for 2017
Colorado’s energy sector, crushed under the weight of collapsing oil and gas prices at the start of the year, ended 2016 with some breathing room and glimmers of hope for 2017 shining through the rubble.
The number of rigs actively looking for oil and gas in the state, down to as low as 15 in early May and stuck at around 20 until late November, is now back to 28 according to a Dec. 23 report from Baker Hughes, which has provided a weekly U.S. rig count since 1944.
A clear signal of a rebound came in early October. Denver-based Extraction Oil & Gas raised $728.3 million, marking the first successful initial public offering by a petroleum producer in more than two years.
Denver-based Bonanza Creek Energy also reached an agreement with creditors to trade $850 million in debt for equity early next year, a swap that likely wouldn’t have happened absent an improved outlook for oil prices following OPEC agreements to cut production.
The Denver-Julesburg Basin, Colorado’s most active play, however, has started to lose ground to the Permian Basin in Texas with its lower production costs.
New state rules designed to provide a greater local say in drilling decisions, rather than calming dissent, triggered a failed bid to put a measure on the ballot that would have left most of the state off limits to drilling. Efforts to drill closer to developed areas could face renewed opposition as activity revives.
On the renewable energy side, wind and solar providers continued to lower costs and grab a larger share of the state’s power generation mix. A compromise between Xcel Energy and two dozen parties in the fall paved the way for solar to take a bigger role,
Even Colorado’s struggling coal industry found a reprieve with the election of Donald Trump, who campaigned as an ally, and with the emergence of two important miners from bankruptcy protection.