Colorado budget office says the economy is recovering in part because of the improved situation in the oil and natural gas sector. File photo by Gary C. Caskey/UPI | License Photo
Sept. 21 (UPI) -- Tax revenue for the shale-rich state of Colorado is recovering and the economy is growing after a downturn in previous years, the state budget office said.
"Sales taxes and individual income taxes are rebounding in 2017 as the economy strengthens from the oil and gas downturn and moderate economic growth of 2015 and 2016," the Office of State Planning and Budget reported in its quarterly forecast.
Colorado is rich in shale oil reserves, supplying about 3 percent of total U.S. crude oil production in large part from its Niobrara and Denver-Julesberg basins. Production quadrupled from 2010 to 2015, but slowed down last year because of the strains of lower crude oil prices. The natural gas sector, however, faced headwinds after two people were left dead and one person was severely injured after a gas explosion in April.
The budget report said the oil and gas sector is expanding, but at a slower rate than in previous years. A survey from the Federal Reserve Bank of Kansas City, which covers Oklahoma, said it expected the price of oil to hit $60 per barrel by the early 2020s and possibly stimulate further growth. Any price increase could "incentivize further production" from shale producers, the report read.
Bill Barrett Corp., which focuses on shale basins in Colorado, said production for the year could be higher than expected. The company said it expected to produce between 6.4 million and 6.6 million barrels of oil equivalent this year, a 4 percent increase from its previous estimate and 12 percent higher than last year. As many as 75 new wells are planned this year.
"The end of the oil and gas industry's contraction and the acceleration of global economic growth have helped boost expectations," the state budget report read.
Drilling services company Baker Hughes reported 36 rigs actively exploring for or production oil and natural gas in Colorado last week, more than twice the level from the same time last year.