Bringing on the Heat

When the economy grows again, natural-gas power plants will certainly make sense, advocates say. Gas sites are easier to permit, less expensive to build and more environmentally friendly than coal. Most environmentalists accept gas as an effective transition fuel that will help wean the country off dirtier fossil fuels such as coal and oil. However, says David Bowden, spokesperson for the Colorado Renewable Energy Society, "the big fault of constructing natural-gas power plants is the price is highly variable. It's still a short-term solution."

But while Bowden and others stress the need for more renewable energy sources, Simmons expresses doubt about those forms of energy, claiming that last year only 1/10th of 1 percent of electricity came from solar and wind power. "Even if [solar and wind] had explosive growth, they would be incidental." He calls renewables "terrific power sources" for small towns and cities, but anything larger then half of Denver is too large to benefit. Steve Soychak, a district manager for Williams, which is drilling gas wells in western Colorado, says it would take 27 acres of solar panels to match the energy output of one well, which only uses between one and one and a half acres. Six wind turbines on ten or twenty acres would be needed to produce the same energy.

"We're staking our electrical generation on natural gas," says Greg Schnacke, executive vice president of COGA. He believes the reserve base is large enough to last for years, but governmental restrictions on access and a diminishment of the industry's employment base and equipment stock over the years will make things tough. That coupled with what he calls a "miserable rate of return" for investors could cloud the future. "The largest gas providers have only returned about 5 percent on their capital," he says. "You can get a better return on a T-Bill with no risk. That does not facilitate attracting a lot of risk capital into the industry."

Some suggest that a price around $3 per Mcf may be high enough for developers to increase their drilling operations but low enough for consumers to afford fuel bills. However, without massive restructuring of markets, Simmons says there may be no chance of stabilizing prices; the boom-and-bust cycle of the last year and a half could easily happen again.