The Mancos shale boomlet appears to be a not-so-distant memory.

It was only months ago that we watched the drilling rig count slowly begin to rise after a six year slide to almost nothing.

After a recent high of 36 on Aug. 18, 2008, companies started pulling back. The slide has been attributed to the recession and to the price of natural gas — which accounts for some 90 percent of production in the San Juan Basin — which dropped precipitously. By early February last year, the county had only three drilling rigs. But then came the promise of shale oil — a bright light on the horizon as natural gas prices continued to lag.

We watched as the drilling rig count slowly began to rise, tripling by May to nine. The number hit 13 in mid-November.

But it wasn't to last.

The Saudis decided enough was enough. They opened the oil spigot in an attempt, which appears to be working, to save their market share by stifling the fledgling oil-shale boom in the United States. As of Jan. 13, the number of drilling rigs in the San Juan Basin had fallen to eight. And the immediate future doesn't look good.

U.S. oil production has also increased significantly, playing a role in the increasing glut that has driven the price of a barrel of oil below $50 and prices at the pump for a gallon of regular below $2. Saudi Arabia is expected to keep the pressure on, literally, at least through the year and it has the reserves to go longer.

We have heard that the price of a barrel of oil must be above $70 for shale-oil drilling to be profitable in the San Juan Basin. Companies with little or no debt are in the best position to weather the storm.

Local oil and gas industry business owners are philosophical, if not overly optimistic. They have seen boom and bust in the past and believe business will pick up eventually.

New Mexico Oil & Gas Association spokesman Wally Drangmeister was the most optimistic. He believes the Mancos shale play will retain its importance and that oil production will continue even if prices are low.

"New wells will continue to be drilled, even if the price (of oil) stays where it is," Drangmeister told The Daily Times.

A pipeline connecting Lybrook with a rail head near Gallup could lower transportation prices and make San Juan Basin drilling more profitable. But that pipeline faces significant hurdles, not the least of which is the maze of rights-of-way that will be required to cross the checkerboard area where land is owned by state, federal, Navajo Nation and private entities.

And, even if all the regulatory and business obstacles are overcome, it won't be completed in the near future.

This bust came quickly, killing a fledgling recovery in a few months. It was driven in large part by a decision made in a foreign country where we have little influence. Oil field workers and their families are falling on hard times, spending savings meant for other purposes and breaking up extended families as people move away to find new jobs. When things were starting to look up, we cautioned our elected officials to invest shale-oil tax benefits into diversifying the economy. Recent events make diversification an even more urgent priority.

Soure: the daily times