DENVER — After nearly abandoning the Rocky Mountains in the past two decades, natural gas producers are scrambling to tap the region's vast resources to satisfy the nation's thirst for efficient electricity.

While the activity is welcomed by many from an economic standpoint, homeowners and environmentalists are concerned about the effects increased drilling will have on the region's water supply.

Drilling rigs are popping up on both sides of the Continental Divide from New Mexico to Montana, and pipelines are being laid as fast as construction workers and equipment can dig the trenches.

Most companies are looking for natural gas fields because prices for the commodity have nearly doubled in the past year and the odds of finding natural gas are better than for oil.

The wholesale price of natural gas this time of year is typically about $2 per 1,000 cubic feet. The price is currently hovering around $5 per 1,000 cubic feet. Prices have risen as utilities turn to the cleaner-burning fuel to meet increased demands for electricity.

The Rockies could become as important as the Gulf Coast in supplying the nation's appetite for natural gas, said Keith Rattie, senior vice president of Houston's Coastal Corp.

While much of the natural gas in the Gulf Coast area has been exploited, about 85 percent of the Rockies' reserves are untapped, said Ken Wonstolen, senior vice president of the Colorado Oil & Gas Association.

The region isn't likely to outproduce the Gulf Coast, but production could increase as much as 40 percent to 60 percent in the next five years, said Tom Robinson, managing director of research for Cambridge Energy Research Associates.

For centuries, natural resources like oil and gas sustained the West's economy, but the oil-and-gas bust of the 1980s put thousands out of work. More lost their jobs during an energy slump two years ago.

Still, between 1995 and 1999, New Mexico, Wyoming and Colorado ranked behind only Texas, Louisiana and Oklahoma in natural gas production.

The Rockies' natural gas reserves often are in the form of coal bed methane, or naturally occurring gas trapped in coal beds by water pressure. The major companies are focusing on coal bed methane because the resource can be reached less expensively by drilling shallow wells, instead of drilling two miles or more into the earth.

The Colorado Oil and Gas Commission expects to issue more than 1,400 permits by the end of the year, up from 1,010 last year, numbers that haven't been recorded since the early 1990s when permits for oil and gas exploration topped 2,000. And in the Powder River Basin of northeast Wyoming and southern Montana, companies expect to drill more than 33,000 wells over the next 10 years.

Colorado Interstate Gas plans to build a $160 million pipeline to deliver natural gas from Wyoming to Colorado and other states, one of several similar projects in the region.

In Wyoming, where revenues are heavily dependent on mineral taxes and royalties, the state budget showed a $116 million surplus this fall, in part because of higher natural gas prices, compared with a $127 million deficit a year ago.

Steve Hayden, New Mexico Oil Conservation Division geologist in the Aztec area, said there has been a fair amount of natural gas activity.

"There's a boom on," he said. "The major limiting factor here for us is the amount of pipeline capacity."

Homeowners in areas where high-density natural gas fields have been proposed or exist and some environmentalists have voiced concerns that regulators are not looking at cumulative drilling effects.

Since drillers must remove the water from coal beds to reach the natural gas, the homeowners and environmentalists are worried about the effects pumping will have on aquifers and wells in the area.

"Our drinking water wells are going dry. Our land is being torn up and devalued," Chris Rigsby of Gillette, Wyo., said during a recent protest at a Denver natural gas symposium.

But Mayor Frank Latta of Gillette, which has the nation's largest reserve of low sulfur coal and ample gas reserves, said he is pleased overall. "Our sales tax receipts are up 25 to 35 percent this year. We have almost zero unemployment," he said.