Oil production in the Rockies is expected to increase in the next five years, though regulation on public lands in the region will present challenges for both new and experienced producers.

"We're going to drill about 25,000 wells in the next five years just in the predominant basins," said Quantum Resources president and chief operating officer Logan Magruder, speaking on behalf of the Independent Petroleum Association of Mountain States (IPAMS), which, along with Fulbright & Jaworski LLP, sponsored a Rockies risks and rewards program in Houston recently.

"Independent oil and gas producers in the Rockies will play a vital role in helping meet the nation's energy needs as long as the U.S. uses natural gas."

The Rockies contain some 33% of the all gas reserves in the Lower 48, with 200 trillion cubic feet (Tcf) of recoverable reserves on public lands. This presents both opportunities for producers as well as legal obstacles that can hold up production.

The Uinta and Piceance basins in Utah and Colorado, respectively, represent the largest portion of drilling targets in the region, with 39.1% of total capex in this area. The Greater Green River Basin in Wyoming will also drive Rockies growth, representing 25.1% of capex. The resources in both regions are mainly unconventional gas, such as coalbed-methane and tight gas. Reserves for the three basins are approximately 181.4 Tcf of gas.

Rig availability is currently not a problem in the region; however, government regulation can have an adverse effect on speedy development.

IPAMS executive director Marc Smith said, "About 65% of applications for drilling permits in the Rockies take more than 90 days as opposed to West Texas, which takes about a week."

Fulbright & Jaworski partner Poe Leggette said government delay is the "silent killer" of oil and gas development. Issues like overworked career civil servants, poor legal advice and political appointees managing only internal political problems all contribute to slower approval times.

Officially, the approval period is supposed to last about 30 days in the region, however permit approval from the Bureau of Land Management is averages 150 days. This is down from 2004, when the average was more than 250 days.

In 2005, E&P companies applied for more than 2,300 leases, and about 1,250 of these were protested. This is a decrease from 2004, when a similar number of leases were applied for and more than 1,500 were protested.

An irony Leggette noted is that one of the groups concerned that noise pollution from drilling and pumping units will scare away deer is a hunting organization whose members want to shoot them.



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