The topic of the week at the Four Corners Oil and Gas Conference was the potential of the Mancos Shale Formation where a handful of companies are exploring for oil and finding positive signs.
Some say the boom has already begun. But — and we've said this before — the number of drilling rigs has remained low, even with an increase from five to seven this week. That's compared to a high of 36 in 2008 just as the "Great Recession," as some call it, hit. Despite the optimism, it may take a while for this "boom" to really gain momentum.
In the meantime, prices for the area's prime export, natural gas, remain depressed. And so does the local economy.
Natural gas still is plentiful in this area with reserves yet to be tapped. So what are the prospects for improvement in the natural gas market?
If you want to get to the nuts and bolts that underlie the big picture, just ask an economist.
And that's what we did. John Felmy, American Petroleum Institute chief economist, stopped to speak with The Daily Times after appearing at the conference.
Felmy advised that overseas markets could drive demand, but that won't come for a decade or more. He said that the federal government could do more to permit the facilities required to export liquefied natural gas, but even with government action, those facilities are very expensive and any increase in demand will come slowly.
Domestic demand could increase, he said. Although he thinks conversions for individuals' vehicles are too expensive unless manufacturers begin mass producing them, Felmy said there are significant savings possible for companies that operate fleets of vehicles or heavy duty trucks. And that savings also applies to natural-gas powered locomotives, he said.
Opportunities also exist in power generation as emissions regulations make operating coal-fired plants more expensive. And there is always the use of gas for heating and cooking.
But reestablishing that market is dependent on one main factor, Felmy said. That's economic recovery. Until the economy turns around, demand will be weak, he said.
Another part of our conversation with Felmy provides a warning that we've sounded in past editorials. Felmy is excited about the possibility of "methane hydrates" that are found in frozen ice crystals — specifically in very deep water and permafrost.
The API website states: "Estimates of the resource potential of natural gas hydrates vary, but most estimates place the resource potential as greater than the known reserves of all oil, natural gas and coal in the world. Several possible recovery methods are now under investigation."
This kind of technological sea change could hurt the oil-and-gas-based Four Corners economy far worse than this lingering recession.
We believe it is vital that Farmington leaders move aggressively toward diversification — boom or no boom. A plan has already been sketched out.
Bringing in manufacturing businesses that use natural gas and oil feedstocks would seem to be a perfect fit. That, of course, will require a railhead and other infrastructure investments, that could be funded, in part, by increased tax revenue from oil production. That would create a more secure future.