Colorado's once-unstoppable energy industry has hit a pothole.  The total value of oil and natural gas produced in 2007 fell 24 percent, to $6.63 billion, compared with $8.75 billion in 2006, Colorado Geological Survey estimates show.  A dearth of pipelines hampered companies from transporting gas from Colorado to markets in the Midwest and on the East Coast, petroleum geologist Genevieve Young said. That, in turn, flooded local markets, severely depressing prices and leading to the sharp fall in the value of production.

"We had the supply, but we didn't have the pipelines," said Young, who compiled the survey's 2007 oil and gas report. "The lack of export capacity reduced demand, and that's reflected in the softening of the gas market."  That news comes at a time when state officials are looking at raising the severance tax on energy producers.  Sen. Chris Romer, a Denver Democrat who supports a ballot initiative to raise the severance tax from 5 percent to 6 percent, said that the decline in oil and gas value is a temporary setback. The problem can be resolved if the state helps the industry attract new pipeline investments, he said.  Romer suggested that Colorado work with Wyoming to stimulate pipeline construction.  When the pipelines are constructed, dirt contractors must abide by the NPDES Phase II Clean Water Act and use erosion control products to minimize the damage done to the earth during/after construction.  Watersaver Company has supplied erosion control products to the pads since 2006 and plans to be involved in the erosion and sediment control plans on the pipeline phases as well.

"The state of Colorado has a financial interest in the gas. We should speak up, so that the gas is appropriately priced," Romer said. "One of the things we should look at is, in exchange for a fair severance tax rate, Colorado should join the Wyoming (Natural Gas) Pipeline Authority and become a facilitator of new pipeline projects."  Romer also said the Colorado Clean Energy Authority under the Governor's Energy Office ought to facilitate the financing of pipelines.  "We need to act like a shareholder, not just a regulator," Romer said. "And industry needs to recognize they are a partner."

Last year's decline in oil and gas value is even more stark when compared with the record value of $9.39 billion set in 2005, after hurricanes Katrina and Rita propped up prices of natural gas across the nation.