WPX announces plan to bring in two additional drilling rigs to Piceance Basin
Post Independent Staff
GLENWOOD SPRINGS — The WPX Energy drilling company on Wednesday announced it will be deploying seven drilling rigs in the Piceance Basin natural gas field for the remainder of 2013, which is two more than the company had previously said it would be operating in the area.
According to a company statement, the increased drilling will add “1.9 billion cubic feet equivalent (BCFE) of production” in 2013, which is a natural-gas industry investment term estimating the company’s long-term reserves and production volumes.
In 2014, the company predicted, the additional drilling could result in much greater production increases.
In the news release, the company said the addition of the rigs is justified by the slowly rising price of natural gas and the company’s existing investment in infrastructure in the Piceance Basin, a large land mass which covers parts of Colorado, Utah and Wyoming.
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Bloomberg.com reported on Wednesday that natural gas prices stood at $3.99 per MMBtu (million metric British thermal units), though the HenryHub spot prices were somewhat higher as of May 29, at $4.15 per MMBtu.
According to the U.S. Energy Information Administration, the price for natural gas has been slowly climbing since January, when it was reported in the range of $3.25 per MMBtu.
Prices have been low for the past two years — following record high prices that reached approximately $14 per MMBtu in the boom years prior to 2008 — leading most energy companies to cut back on drilling activities.
According to Kirby Wynn, director of the Garfield County Oil and Gas Liaison office, the only other company adding to its complement of drilling rigs this year will be Ursa Resources, which last year bought out Antero Resources’ assets in the Piceance Basin. Ursa is bringing in one new drilling rig in the fall, Wynn wrote in an email reply to a question from the Post Independent.
The addition of the two new rigs this year will cost the company approximately $60 million, part of the company’s capital plan to invest of up to $1.2 billion in the Piceance Basin operations this year.
The stepped-up production of oil and gas, the company reported, will be more evident in 2014, given the time required for drilling and completing gas wells in the area.
“Now’s the time for us to accelerate our natural gas production and the Piceance is the right place to start,” said Ralph A. Hill, the company’s president and chief executive officer, according to the release.
“Natural gas prices are stronger, and this helps lay the groundwork for our 2014 development.”
He maintained that WPX is in the best position to quickly increase production in response to changing market conditions, because “we have the permits, favorable processing contracts,” and good transportation and operating equipment ready to go.
The release stated that the additional drilling this year will focus on reserves in the Williams Fork formation, where the company already has drilled “more than 4,100 tight sands wells.”
The company also plans to continue drilling in the relatively newly discovered reserves in the Niobrara Formation, a geologic formation that is roughly 85 million years old, which has been the focus of considerable investment and interest in the industry for the past few years.
The release stated that WPX plans to drill four horizontal wells in the formation this year, to begin determining the full potential of the discovery.
WPX is a drilling company created at the end of last year when Williams Production RMT split in two, also creating Williams Midstream, which focuses on pipelines, tanks and distribution of natural gas.
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