Factors responsible for a persistent downturn in the Four Corners region's economic climate are coming together in what has been described as a "perfect storm."

That storm is creating deficits that are leading to cuts in services and possibly even tax increases for San Juan County residents.

Those factors include gaming industry competition that has cut into payments the city of Farmington receives from SunRay Park and Casino, the planned closure of units at regional power plants and, most recently, the 15-year plan to eliminate the state's "hold-harmless" payments to Farmington and San Juan County.

Those payments filled the hole left when medicine and food purchases were exempted from the state's gross receipts tax.

But the keystone in this arc of economic malaise is the glut of natural gas that has driven prices down. ConocoPhillips recently announced that it was suspending plans for new wells in the region.

Company officials said the suspension that shut down three rigs was "temporary." And it plans to continue production from existing wells.

The company was New Mexico's most prolific natural gas producer in 2012. One billion cubic feet of natural gas and oil are pumped from 10,000 San Juan Basin wells daily.

But that is little consolation for oil and gas contractors or their employees, some of whom will lose their jobs. Other industry workers likely will have to pull up roots and travel to locations where drilling operations are cost-effective.


Although possible solutions to these problems exist, none appear to have the potential to quickly change the forecast.

One solution is to create a bigger market for natural gas.

That can be done by increasing exports and by finding new ways natural gas can be used to power our modern lifestyles.

And there was guarded optimism at a recent conference here on the potential of extracting oil from the Mancos shale formation Ð characterized as an "unconventional play" Ð with horizontal drilling and hydraulic fracturing.

Experts at the conference explained how each play has its own characteristics. And there is artistry involved in learning the best way to coax out the oil.

"There are sweet spots in the shales," said Darryl Willis, with BP America. "You must have up to 10s, or even 100s, of completions before an operator can learn how to develop unconventional plays."

Willis said that requires a "reservoir understanding" that leads to "repeatability."

Encana, a Canadian company, has been the most aggressive when it comes to exploring the possibilities of the Mancos formation.

"We're kind of trailblazing to see how we should produce those reservoirs," Encana's Jeff Balmer said at the conference. "It's a bit trial and error and it's a bit science."

Balmer said that there are "dozens and dozens of small Mancos oil pools."

However, the wells have lacked a consistency. Production "only lasts a little while and then you have to start babying these things," he said.

Balmer, the company's San Juan Basin asset manager, warned that there is competition for resources within the company.

"We compete on a dollar for dollar basis with all the other operations in Encana's portfolio," Balmer said. "That's why it would be nice if some of you other guys would start drilling out here."

That drew a laugh at the conference, but it strikes at a basic truth also mentioned by Willis. The more completions, the better likelihood that the San Juan Basin will see the kind of drilling activity that would improve the economic climate.

We hope that happens. However, it would be prudent to begin, in earnest, to build a more diversified Four Corners economy so it can weather the inevitable boom and bust cycles.