Wringing high-grade oil from rock
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Oil prices slid from about $26 a barrel in early 1986 to less than $10 and have bounced around in the teens ever since. With some analysts predicting that prices will sag even lower, small stripper-well reliant firms like Conquest can only sit tight and hope the Organization of Petroleum Exporting Countries reaches terms to limit output somewhat.Skip to next paragraph
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``This is not a get-rich-quick deal,'' says White, the tanned, cleancut young president of Conquest. ``The returns are moderate.''
White is one of a new breed of operators here in Weld County. He's been in the oil business for only a few years and does not consider himself an ``oil man'' in the usual sense of the word. He has survived by playing a conservative game of drilling only when drilling costs are low - and minimizing company overhead. The firm has six employees.
With large amounts of excess equipment and companies competing for what little drilling is going on, Conquest can pick the low bid on any new well it is drilling. The company plans eight or 10 wells a year.
Exploration has revived somewhat from a low point in 1986. The activity is still behind the boom years of 1980 through 1985. Companies are still keeping costs down and minimizing exploration costs. The problem is that ``lack of exploration comes back to haunt you in 30 to 36 months,'' says Dennis Bicknell, associate director of the Colorado Oil & Gas conservation commission.
Weld County has one advantage that helps keep exploration costs low, White says. It is, simply, that every well drilled in the region has about a 99 percent chance of striking an oil-bearing layer of rock called the Codell formation, which was a sandy ocean bottom millennia ago. The bad news is that the sand is now of a cementlike consistency, and hydraulic fracturing is needed to release oil and gas. In any case, the yields are generally not large.
Big oil companies are on an elephant hunt - they want million- or billion-barrel pools and economies of scale. Conquest and hundreds of other small and medium-size oil companies with already low overhead have survived by cutting costs.
Large companies like Chevron and Arco have recently announced reductions in the region, including cutting back headquarters operations in Denver. Racked by rapid boom/bust cycles in the '80s, the industry now has another problem: a lack of trained personnel.
``We've lost all these trained people, geologists, geophysists,'' Mr. Bicknell says. ``The Colorado School of Mines has few petroleum engineering students. Why study a hard curriculum if you can't get a job?''
Entry-level jobs as a drilling rig roughneck used to pay $13 an hour, but now pay about $6 - when a position can be found. Jokes similar to those rampant on Wall Street after last year's stock market plunge are common here. ``How do you find an oil geologist in a restaurant?'' asks Bicknell. ``You say, `Hey waiter.'''
Back near Greeley, at this well among the cornstalks, Mike Vance fiddles with the controls to adjust the speed of the pump.
``It's been a tough go,'' he says. ``In 1984 it was plenty tough. None of us thought it could get worse - but it did. ... It's gotta get better now.''