Utah's oil, gas industry fighting to recover from recession

SALT LAKE CITY — The state's oil and gas industry is holding steady midway through the year.

Conditions are certainly looking better than they did in the midst of the Great Recession in 2009, but the industry's fiscal vitality is still struggling to reach parity with those good times of 2007 or 2008.

"We're doing OK," said Jim Springer, spokesman with the state Division of Oil, Gas and Mining. "Compared to those boom years when we had rig counts of 40 or 50, we are still down, but overall, we're OK."

That somewhat hesitant, less than jubilant characterization of the oil and gas industry's health in Utah is replicated in neighboring energy-producing states such as Colorado, Wyoming, Montana and New Mexico.

An annual running rig count average for these Western states done by Baker Hughes, an oil field services company, reflects healthy numbers in 2008, drastic drops in 2009 and some gains made last year.

"We're staying consistent," Springer said.

An anomalous blip on the rig count chart is North Dakota, with its massive oil-rich Bakken field fueling monumental activity — jumping from an annual average of 39 rigs in 2007 to 2010's 114.

"North Dakota is the hottest place in the country right now," said Utah Petroleum Association's President Lee Peacock. "Companies are in a mad scramble to get in on those plays. With the price of oil high, that is very attractive."

North Dakota is not only luring companies with money to invest but the accompanying drilling hardware — such as rigs, Peacock said.

"There's a finite number of rigs in the West," he said. "In places like North Dakota that have had an upswing in the industry, that is where the constant supply of future work could be and so a lot of rigs have migrated there."

Utah, still, continues to maintain a "robust" presence in the industry, Peacock said, ranking 13th in the nation for crude oil production in 2008 and moving into the 12th spot last year.

The Beehive State is ninth in the nation for gross natural gas production, not including federal offshore areas. Springer said production has been able to increase year to year despite lower rig counts because of advances in technology and efficiency.

"The big companies now drill multiple holes from a single pad site using one rig," he said. "And these companies are in it for the long haul. The resource can be stored and used at later dates, perhaps when prices are higher due to demand."