As the Four Corners Oil & Gas Conference approaches -- it's May 7 and 8 -- exploration and production in the San Juan Basin appears to be on an upswing.
As everybody who has spent any time in our section of the Four Corners knows, natural gas has been the area's strongest export. But a supply glut drove prices down and the area's economy suffered. The drop in oil-and-gas tax revenue has hit just about every operation in San Juan County, from local governments, to San Juan College to the businesses that support the extractive industries and those that support the workers. That's just about everyone.
So it was good news when companies with local operations, Encana and WPX Energy in particular, began poking holes to explore the Mancos Shale Formation. That formation could be the source of another boom in the area. Using modern methods that include refined versions of horizontal drilling and hydraulic fracturing, known as fracking, the companies have begun to produce some oil from the formation.
Three companies have announced plans to invest more than $600 million exploring the San Juan Basin this year.
Earlier this year, LOGOS Resources announced plans to spend $100 million. WPX Energy announced plans to spend $160 million. And Encana Corporation expects to invest between $300 and $350 million, three times the amount they spent last year.
Encana spokesman Doug Hock says increasing oil production in the basin is a priority this year.
"We've identified it as one of our key areas of focus this year," he said.
The money is intended to pay for drilling as many as 50 net wells this year and run as many as four rigs, Hock said.
That activity has attracted the attention of others and ignited talk of another energy production boom.
"It's already here," said John Roe, who is part of the executive committee that planned the 2014 oil and gas conference.
And there is evidence that more people are interested in what's happening here.
Karen Ortega, chairwoman of the conference's executive committee, says this is the best attended conference since it began in 1994.
Ortega says as many as 1,800 people, including representatives from 300 companies from around the country are expected to attend.
That's a good opportunity for companies to find out more about the potential of Mancos Shale, which could result in more investment in San Juan Basin exploration and production.
Anecdotally, we see indications of increasing life in the local energy industry. Some oil-and-gas support businesses have signs advertising for workers. And radio advertisements are asking for qualified truck drivers and others with industry expertise.
We want to believe, but we're in a business that demands a healthy amount of skepticism. We watch the drilling rig count, for instance. And that measure of activity in the basin has not moved much.
In 2008, the county peaked at 36 drilling rigs and that number has dropped year by year since. This year started with seven rigs, which dropped to three in February and early March and rose to five in mid-March, where it currently sits.
The promise of investment is an encouraging sign. And the interest in this year's oil and gas conference could help create more momentum in the right direction. Some indications of what is to come will be included in conference presentations. We'll be there to report back on what we learn.