The market value of oil pumped out of Colorado fields jumped past the value of natural gas for the first time in decades, as oil production increased and natural gas prices cratered, according to a new study.
In March, the market value of Colorado oil, as calculated for state taxes, was $351 million, compared with $243 million for natural gas, said Bozeman, Mont.-based Headwaters Economics, a nonprofit natural-resource consultant.
“This is part of a shift we are seeing in the West,” said Mark Haggerty, a Headwaters economist.
Oil production is being spurred by new technology allowing the drilling of shale formations — such as Colorado’s Niobrara, which stretches from El Paso County to the Wyoming border.
“The boom is going to present a real fiscal opportunity for Colorado,” Haggerty said.
In 2010, the oil and gas industry paid the state and local governments $572 million in taxes, leases and royalties, according to a University Colorado-Boulder Leeds School of Business study.
“Severance taxes are based on production, and oil has helped keep tax revenues up as natural gas prices go down,” said Tisha Schuller, president of the Colorado Oil & Gas Association, a trade group.
The industry employs about 40,000 people in Colorado, a number likely to grow as out-of-state drillers and oil-field service companies invest here.
Natural gas production remained stable over the past few years and is 4.4 million cubic feet a day, according to an analysis by Denver-based IHS Consulting.
But the value of that gas has plummeted. In 2009, natural gas and oil prices were are at parity — about $40 for the equivalent amount of energy, the Headwaters study said. Oil is now at $105.74 — based on the equivalency standard — and natural gas is worth $13.54.
Colorado oil production is 53,000 barrels a day, a 90 percent increase in three years, according to IHS.
“That is all being driven by the Niobrara,”said Pete Stark, an IHS vice president.
In August, the Colorado State Land Board raised $19 million for oil and gas leases in the Niobrara. In January, ConocoPhillips paid $137 million for oil leases on the former Lowry Range. The proceeds of land board auction go to K-12 education programs and school construction.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com