Colorado's hydrocarbon resources

• Summary: One of the wealthier US states, Colorado is also rich in hydrocarbon resources. The state is one of the country's largest oil producers. Colorado also has many natural gas fields, which account for nearly 4 percent of the country’s natural gas production.

Encompassing most of the southern Rocky Mountains, Colorado lies at the western edge of the Great Plains, and while one of the largest American states, it is also one of the least densely populated. It is also among the wealthiest, with the tenth-highest per capita income in 2024, according to StatsAmerica. Originally a state dependent on its agricultural economy, Colorado has diversified and has especially benefited from its central location in the United States. As a result of that location, it is a prime area for federal government offices; the Denver metropolitan area employs many federal workers.

Denver is home to the US Court of Appeals for the Tenth Circuit, the Denver Mint, and the Denver Federal Center. The North American Aerospace Defense Command (NORAD) and the Air Force Academy are based in Colorado Springs. The ADX Florence supermax prison is located near Canon City, along with several other federal prisons.

Proximity to these federal agencies has also drawn numerous government contractors to Colorado, including Lockheed-Martin and Ball Aerospace. Denver enjoyed a tech sector boom in the 1990s, although that has since slumped. However, industry still thrives in Colorado, in part because of plentiful hydrocarbon resources. The country's eighth-largest natural gas reserves are located in Colorado, which accounted for nearly 4 percent of US natural gas production in 2024, according to the Energy Information Administration (EIA). Eleven of the country's one hundred largest natural gas fields are partly or completely in Colorado.

Crude oil production in Colorado accounts for about 4 percent of the country’s total and takes place mostly in the Piceance and Denver Basins. In 2024, Colorado produced five times as much crude oil as it did a decade earlier, mostly because of horizontal drilling and hydraulic fracking, according to the US Energy Information Administration (EIA). Two refineries north of Denver, in Commerce City, refine the state’s crude oil, and additional oil is brought to market by pipelines from Texas, Oklahoma, and Wyoming. Natural gas production and consumption have both been steadily increasing. According to the EIA in 2025, about 70 percent of Colorado households heat their homes with natural gas, and utilities have been relying more and more heavily on natural gas for electricity production. Only about one-fifth of the natural gas produced in Colorado is consumed in the state; the rest is sold to markets in midwestern and western states. The Rockies Express Pipeline transports natural gas from Colorado to Audrain County, Missouri, and Clarington, Ohio. Most electricity production in Colorado originates at power plants that burn coal and natural gas. Colorado produces about double the amount of coal that it needs; the remainder is sold throughout the country.

The state has no nuclear power plants. The Fort St. Vrain Generating Station was Colorado’s sole nuclear plant from 1977 until 1992, but it was less profitable than its investors had hoped. After it was decommissioned as a nuclear power plant, it was converted into a natural gas combustion plant, operating in combined-cycle mode by using heat recovery steam generators to recover waste heat for a second stage of generation.

The remaining amount of Colorado’s electricity generation comes from hydroelectric and wind power. The state’s considerable hydrocarbon resources have caused it to neglect the development of its renewable energy resources, though the potential for renewables is vast: the state is predominantly sunny and possesses many locations well suited to wind farms. The state has set a goal to cut its emissions by 50 percent by 2030, 90 percent by 2040, and 100 percent by 2050.

The Ames Hydroelectric Generating Plant near Ophir was the world’s first commercial power plant transmitting alternating current (AC), launched as a Westinghouse Electric project in 1890 during the War of Currents between Westinghouse (as patron of Nikola Tesla) and Thomas Alva Edison (proponent of direct current). The Ames plant helped to prove that alternating current was more efficient. The plant is still in service, albeit without the original 1890 equipment; today it uses a generator installed in 1904.

Colorado's use of wind power more than doubled between 2014 and 2024, according to the EIA. The state ranked seventh nationwide in installed wind power generating capacity. The Bronco Plains Energy Center, which became operational in 2023, has 72 turbines and added 200 megawatts of wind power capacity.

A biomass plant in Vail burned the thousands of trees killed by a pine beetle infestation for cheap, renewable energy, while reducing the risks of forest fires by clearing the Colorado forest of dead wood. Denver was the first metropolitan area to require that gasoline be blended with ethanol to reduce emissions, but Colorado has been slow to implement large-scale ethanol production. The Coors Brewery in Golden uses its waste beer to produce ethanol fuel, significantly reducing the plant’s emissions as well as cutting costs. In the northeast, ethanol from corn is produced at a number of small facilities.

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