EnCana to scale back Piceance Basin operations in 2009
GLENWOOD SPRINGS, Colorado EnCana Oil & Gas (USA), the second largest natural gas operator in Garfield County, plans to scale back its drilling in the Piceance Basin by more than 50 percent, the company announced Thursday.Doug Hock, a spokesman for the company, said the companys 2009 plan for the area is to drill 140 wells in the Piceance Basin, down from the 300 wells it drilled this year. He said the company will have five drilling rigs operating in the area next year, a reduction from the 12 rigs it had running in the summer.We are reducing our expenditures across the board, Hock said of the companys plans across Canada and the United States. We are going to be very prudent and conservative in spending our capital.Hock said no layoffs for EnCana employees across the company are currently being contemplated.Obviously, our levels of contractors will be lower, he said.All of EnCanas drilling rigs in Colorado next year will be located in the Piceance Basin, Hock said. The company had one operating in the DJ Basin, a drilling area located in Weld County.The reduction in drilling comes as the company plans to reduce its investment in Colorado next year by nearly $300 million, Hock said. The company spent $700 million to drill in the state this year, but plans on reducing that figure to $400 million in 2009, he said. Encanas investment in the Piceance Basin next year will be $300 million, down from the $485 to $500 million it spent to drill in the area this year.EnCana cited the current credit crunch paralyzing the American economy, the cost to drill in the Piceance Basin and the untested rules recently approved by the Colorado Oil and Gas Conservation Commission as factors in its decision to scale back in the state this year. Those factors, along with limited pipeline capacity and falling natural gas prices, have led eight other operators to announce drilling cutbacks in the area.At the same time we are being faced with challenging economics, we are also being hit with new untested rules, Hock said. The economic conditions coupled with the new, untested rules create a kind of one-two punch that has led us to pull back on our investment.While the company has plans to reduce drilling in Colorado, it is looking to increase activity in the holdings the company has in the gas-rich formations of the Haynesville Shale, near Shreveport, La., and the Deep Bossier, in east Texas, Hock said.Those are areas where we are going to focus on building up those resource plays, he said.Contact Phillip Yates: email@example.comPost Independent, Glenwood Springs, Colorado CO
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