PARACHUTE, Colorado — Encana Corporation announced Friday that it will not be drilling any new natural gas wells in the Piceance Basin of northwestern Colorado in 2014, but will continue to maintain its more than 3,000 active wells in the region.
“If commodity prices change, we would have the flexibility to bring rigs back to the area,” Doug Hock, Encana’s Denver-based spokesman, said. “As of right now, we do not have plans to run any rigs in the Piceance in the near future.
“We will continue to operate and maintain the wells we have in place,” he added.
Earlier this week, the company announced its 2014 guidance, or company strategy, for the coming year. The plan outlines a focus on five geographical regions where there is a “high potential” for oil and liquids development potential.
That will include increased drilling activity to tap reserves of oil and liquids in the DJ Basin on Colorado’s Front Range, and in the San Juan Basin in northwestern New Mexico, Hock said.
“Right now, our portfolio is skewed toward natural gas,” he said, noting that about 90 percent of the Canadian company’s activities are related to natural gas.
“Especially with low gas prices, we are trying to balance that out a little more toward oil and liquids,” Hock said.
The decision to suspend new gas drilling in the Piceance will impact Encana workers involved with front-end drilling operations.
“We will be offering opportunities for those people in these other areas, such as the DJ and San Juan basins,” Hock said.
An announcement of the companies’ plans to scale back local drilling operations was made Friday at regional offices in Parachute in western Garfield County, where about 155 Encana employees are based, and in Rangely in Rio Blanco County, where another 55 workers are based, Hock said.
The decision will not result in any further layoffs, after Encana announced last month that it was reducing its company wide workforce by about 20 percent. Most of those layoffs were at company offices in Denver, Plano, Texas, and Calgary, Canada, although a handful were in the Parachute offices, Hock said.
“These things are never easy, and we wish those colleagues the best,” he said. “For our drilling personnel, for the most part we will be looking to relocate them to other areas.”
The decision by Encana will impact countless contractors and subcontractors based in Garfield County and other parts of western Colorado that work on the drilling end of oil and gas development.
Last year, Encana drilled 116 new natural gas wells in the Piceance Basin, and is on track to drill about 100 new wells this year, Hock said.
In a Wednesday news release announcing the company’s strategic plan for the coming year, Encana President and CEO Doug Suttles commented, “Going forward through to 2017 we will measure success by our performance on three key indicators; our transition to a balanced commodity portfolio, operational excellence and the integrity of our balance sheet.”
Total liquids production is expected to grow by 30 percent in 2014 compared to this year, according to the company news release. That is expected to offset what the release described as a “small decline” in expected gas production for 2014.
Hock said the decision to suspend new natural gas drilling in the Piceance will not impact Encana’s long-term agreement with steel producer Nucor, which maintains a 50 percent interest in Encana’s natural gas operations going forward.
“While we will be taking a pause in new drilling, that agreement will remain in place,” Hock said.
“The Piceance is still a strong asset for us that continues to provide revenues for us, and will continue to be a part of our base,” he said. “When gas prices get a little higher, it will still provide an opportunity for us to resume new drilling.”