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China sending gas rigs to Colo.
Western Energy also may bring in workers as early as September

By Gargi Chakrabarty, Rocky Mountain News
July 9, 2005

A rig built in China and Chinese crews to operate the drilling equipment are scheduled to reach Garfield County's Piceance Basin as early as September.

It will signal the beginning of outsourcing from China to drill oil and gas wells in the Rocky Mountains. Over the next couple of years, 10 Chinese rigs - and crews to operate at least half of those rigs - will be imported from China to this region, said Bill Croyle, a partner in Western Energy Advisors.

Western Energy Advisors helps China National Petroleum and its subsidiaries sign drilling contracts with U.S. companies. Croyle said Chinese rigs would fill the shortage of rigs in the West's booming energy industry, noting that the Rocky Mountain area is short about 200 rigs.

The rent for rigs, which are used to drill oil and gas wells, has jumped to $14,000 a day from $8,500 a year ago, say industry executives.

Rep. John Salazar, D-Colo., whose district includes some of the state's largest gas fields, is not happy about the trend.

"I am totally against the Chinese government running the jobs in our country," Salazar said. "With the Chinese government getting involved, it's not even a competitive business model. Outsourcing has already claimed millions of jobs. We cannot allow that to happen within our own borders."

Importing rigs and crews from China to drill in Colorado gas fields is likely to stir a controversy at a time when an $18.5 billion all-cash offer from China's state-owned CNOOC Ltd. to buy out Unocal has raised political hackles in Washington, D.C. The news is also spurring criticism in Garfield County, Croyle said.

"In the (energy) exploration and production industry, this is not even news. It is the normal course of business, in going where the resource is and finding the equipment and services to develop the resource," he said.

The import of Chinese equipment and workers would be facilitated by Denver-based Golden Bear Drilling & Services Corp. The Chinese companies would enter into drilling contracts with energy producers in the Rockies at competitive rates, Croyle said.

Croyle declined to name the Colorado company contracting the Chinese rig and crew this fall, citing confidentiality agreements. EnCana Oil & Gas (U.S.A.), Colorado's biggest natural gas producer, has met with Golden Bear officials too, although the company doesn't have any firm plans to import rigs from China.

Golden Bear originally was a joint venture between China's Jilin Petroleum and a group of private oil and gas investors from Colorado, Texas and Oklahoma. But earlier this year, Jilin Petroleum sold its equity stake in the company, Croyle said. He declined to reveal the identity of the investors.

The Colorado Office of Economic Development and International Trade worked with Jilin Petroleum and others involved in setting up the joint venture, Golden Bear. The state agency met with partners of Western Energy Advisor last fall and earlier this year.

"(Bill) Croyle came to us with information about the Chinese delegation," said Laurel Alpert of the state agency. "We basically were happy to meet with them and provided them with information about the state."

But the prospect of Chinese crews taking jobs in the gas fields of Piceance Basin has evoked a mixed bag of reactions from Coloradans.

Howard Arnold, business representative of the United Association of Pipefitters Local Union No. 208, said bringing in Chinese crews could lead to some labor unrest, although most of the workers on drilling rigs don't belong to unions.

"China exports labor and equipment everywhere. It won't surprise me to see them in oil rigs," Arnold said. "However, everybody would be affected directly and indirectly if they import Chinese labor."

Arnold said importing Chinese crews could raise issues much like the controversy raised in the 1800s when Chinese laborers were used to build most of the West's railroads. Chinese participation was limited after 1882, when Congress passed the Chinese Exclusion Act, which prohibited Chinese workers from entering the country and declared Chinese immigrants ineligible for citizenship.

The law was repealed in 1943 when China became an important ally against Japan in World War II.

chakrabartyg@RockyMountainNews.com or 303-892-2976

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Chinese drills, crews to work in Colorado
posted by: Dan Werner Web producer
Created: 7/9/2005 10:18 AM MDT - Updated: 7/9/2005 10:19 AM MDT

GLENWOOD SPRINGS, Colo. (AP) - In a move reminiscent of the construction of the intercontinental railway in the 19th century, a Chinese-built rig with a Chinese crew will begin drilling this fall in the Piceance Basin, the Rocky Mountain News reported Saturday.

The basin, where oil and gas production is booming, is short 200 rigs, the newspaper said.

Bill Croyle, a partner in Western Energy Advisors, said Chinese rigs could fill the gap. He declined to identify the company that is hiring the Chinese. His company helps China National Petroleum and its subsidiaries sign drilling contracts with U.S. firms.

U.S. Rep. John Salazar, D-Colo., whose district includes some of the state's largest gas fields, said he is opposed to the employment of Chinese government workers. "With the Chinese government getting involved, it's not even a competitive business model. Outsourcing has already claimed millions of jobs. We cannot allow that to happen within our own borders."

Most oil rig workers are not in unions, but Howard Arnold, business representative of the United Association of Pipefitters Local Union No. 208, said bringing in Chinese crews could lead to labor unrest. He compared it to the importing of Chinese crews to build railways in the West. Congress reacted by banning Chinese immigration in 1882.

"In the (energy) exploration and production industry, this is not even news. It is the normal course of business, in going where the resource is and finding the equipment and services to develop the resource," Croyle said.

China's state-owned CNOOC Ltd. has made an $18.5 billion all-cash offer buy out Unocal, which has raised political hackles in Washington, D.C.

Denver-based Golden Bear Drilling & Services Corp. would facilitate the import of the Chinese rig and staff to Colorado, Croyle said, adding they would enter into drilling contracts with energy producers in the Rockies at competitive rates.

Golden Bear began as a joint venture between China's Jilin Petroleum and a group of private oil and gas investors from Colorado, Texas and Oklahoma. Earlier this year, Jilin Petroleum sold its equity stake in the company, Croyle said. He declined to reveal the identity of the investors.

The Colorado Office of Economic Development and International Trade helped create Golden Bear after meeting with partners of Western Energy Advisor last fall and earlier this year.

"(Bill) Croyle came to us with information about the Chinese delegation," said Laurel Alpert of the state agency. "We basically were happy to meet with them and provided them with information about the state."