Denver (Platts)--24Apr2008

The emergence of the Rocky Mountains as a major production area is
forcing gas and oil companies to make adjustments to the way they operate,
particularly in addressing environmental concerns, speakers said Thursday at
the Platts Rockies Gas and Oil Conference in Denver.
"The industry is facing unprecedented change," Rebecca Watson, partner in
the law firm Hogan and Hartson, said. Because of high global demand for all
energy commodities, market forces are compelling producers to "get more
resources; find more supply." And natural gas is not exempt from those
demands and "is no longer a regional market concern," she said.
The total number of wells drilled is growing sharply due in part to
the unconventional nature of Rockies reserves, which require more wells and
greater surface disturbance, Watson said. In addition, when seeking leases,
Rockies producers are increasingly encountering split estates featuring
"different owners with different goals for the property."
To deal with the soaring levels of gas production and the potential
impact on environmental resources, Rockies states have responded by
establishing "rules, and more of them," Watson said.
Dave Neslin, acting director of the Colorado Oil and Gas Conservation
Commission, stressed that his state does not want to chase the gas and oil
industry out. "We want it to continue to thrive" in Colorado, "but we also
want to ensure that our mountains, forests, streams and wildlife are
protected."
Mark Fesmire, chairman of the New Mexico Oil Conservation Commission,
stressed that "the industry has to be proactive in taking care of this stuff"
if it hopes to continue producing. He noted that "significant distrust of the
industry" exists among the general population due to its poor prior
environmental record. "We've got to be mindful of the fact that people are
going to be watching us."
Indeed, growing segments of the population are demanding proof that the
industry can produce gas and oil "without contaminating or destroying
resources such as water," which is scarce in New Mexico, Fesmire noted. "If we
don't meet that higher standard, we're going to be kept out of some of the
most promising areas of the West."
-- Melanie Tatum, melanie_tatum@platts.com