An energy boomtown goes bust

Even as the national economy went into a tailspin, resource-rich towns like Parachute, Colo., were doing fine. Then natural gas prices began to plunge, and the pain began to rise.

Reporting from Parachute, Colo. — Robert Knight was about to install wireless transmitters on eight new drilling rigs joining the thousands that dot the ravines and mesas here when he got the startling news: All but one of the rigs were coming down.

Falling natural gas prices had led energy firms to abruptly curtail their work here last month, battering the last sector of the U.S. economy that had prospered despite the recession.

“Boy, it was quick,” said Knight, who has a business installing communication equipment and who serves as the town manager. “It was like the difference between night and day.”

…In better times, “you couldn’t find a hotel room, you couldn’t find a campground, you couldn’t find a place to rent,” said Laura Diaz, the town planning clerk. That’s changing fast.

“On Christmas Day there were three U-Hauls in my neighborhood,” she said. “It is a little frightening for the people who have been here and know the history.”

According to the energy service company Baker Hughes, the number of active oil and gas drilling rigs in the U.S. has dropped 13% since its peak in August. Gary Flaharty, the company’s director of investor relations, said the decline matches the industry’s response to previous price drops.

Energy experts say the state of the economy could prolong this energy downturn. “The boom, absolutely, is over for the moment,” said Pete Stark, vice president for industry relations at IHS in Englewood, Colo.

LA Times