More drillers plan to cut back Piceance Basin operations
GLENWOOD SPRINGS, Colorado Several more oil and gas companies have outlined preliminary plans to cut back their drilling operations on the Western Slope.During a Northwest Colorado Oil and Gas Forum meeting in Rifle on Thursday, more operators announced plans to cut back or slow down the pace of their drilling in the Piceance Basin a gas rich formation that stretches across Mesa, Garfield and Rio Blanco counties. Antero Resources is scaling back its operations next year, said Jon Black, operations manager for the company. Antero plans to drill 37-40 wells, down from the 84-86 wells it will complete this year, he said.ConocoPhillips Co. is down to one rig after having five of them operating in the area at the beginning of the year, said Derek Wagner, a community affairs representative for the companys operations in the Piceance Basin. He characterized the companys joint venture with EnCana in the area as a slowing down, and added the company is still evaluating its 2009 budget for the area.Marathon Oil Co. is running three drilling rigs in the Piceance Basin, down from four last month, said Bob Coleman, operations manager for the company. He said Marathon is still finalizing its 2009 budget but added the companys current plan is to run two drilling rigs through next year.Laramie Energy II recently had three rigs running in the area, but they let one go last month. It plans to drop another rig in a month, said Ken Leis, director of land for Laramie.EnCana Oil & Gas (USA), the second largest natural gas operator in Garfield County, is expected to release its final 2009 budget for its operations in the Piceance Basin next week. However, the company is expecting cutbacks, said Doug Rosa, an EnCana operations field manager. Currently, the operator has 10 drilling rigs in the area.Already, Williams Production RMT, Delta Petroleum and Bill Barrett Corp. have announced plans to scale back their drilling operations in the area. Chevron is not planning to ramp up its drilling in the area. Instead, it plans to maintain its current investment level in the area for the next three years.Representatives for those companies have said these decisions have been spurred by the problems affecting the credit markets, the declining price of natural gas, the limited pipeline capacity in the area and the uncertainty surrounding new rules for the states oil and gas industry. The Colorado Oil and Gas Conservation Commission could approve those updated regulations next week.We will be watching what the economy does, and well adjust as necessary, said Jeff Fandrich, a landman for Bill Barrett Corp.The companies plans to reduce drilling operations next year comes at time when there continues to be a surge in drilling permits for wells across the Piceance Basin. However, those permits, which are good for one year, do not necessarily translate into immediate drilling activity.Since the beginning of the year, the Colorado Oil and Gas Conservation Commission (COGCC) has issued 2,655 permits for drilling in Garfield County. That accounts for 36.7 percent of the 7,246 permits the COGCC has issued this year.While permits for drilling on private lands continue to trend upward, the Bureau of Land Management expects permitting to head downward next year. The agencys most recent statistics show that the agency expects to issue 634 drilling permits in its 2009 fiscal year, down from the 651 permits the agency issued the year before.Leis, the landman for Laramie II, said the uncertainty surrounding the oil and gas rules could influence companies plans for next year.We all think the new rules will make doing business more expensive, he said.Dave Neslin, acting director of the COGCC, said the regulatory changes may be a factor for some companies to alter their 2009 budgets. But he added that the largest factor in any plan to cut back on drilling are the current economic conditions and the drop in natural gas prices. Neslin said the agency has done several things to address the reported uncertainty surrounding the new rules, such as incorporating substantial input from the oil and gas industry into the regulations with the most significant revisions. The agency has also deferred the effective date of the rules April 1 on private lands and May 1 on federal lands to give industry officials and others time to prepare for the new rules. We will do a significant outreach effort to make sure operators, counties and other interested stakeholders understand what the changes are, he said. We want to ensure these rules are implemented in as smooth a manner as possible.
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