By Dennis Webb – The Daily Sentinel – February 11, 2014
WPX Energy said Monday it plans to operate an average of two more drilling rigs in western Colorado’s Piceance Basin, boosting its local total to nine at a time when little other drilling is occurring in the region.
The move could increase its annual Piceance capital expenditure by about $100 million, to nearly a half-billion dollars. About $75 million alone will go toward the drilling of up to 10 additional exploratory wells in the Niobrara formation, where initial WPX wells have been highly productive.
Most other companies have suspended their Piceance drilling due to low natural gas prices and in many cases the desire to drill for more oil and liquids in other areas. In December, Encana USA, which a month earlier was operating five Piceance rigs, said it was taking a break from local drilling.
According to both WPX and analysts following the company, its Piceance holdings are such a sizable part of its overall revenue that it’s important for the company to keep up local gas production.
“The Piceance is an absolutely critical part of our business,” WPX spokesman Kelly Swan reiterated Monday.
The company says it expects to grow its local production of gas and associated liquids by 6 percent this year, and drill up to 285 wells in the Piceance during the year. Local capital spending could run from $475 million to $495 million.
Part of this year’s work will involve trying to assess the size of WPX’s Niobrara gas assets by doing what’s called delineation drilling in various parts of the company’s oil and gas acreage in the Colorado River Valley. This year’s work is aimed at letting it finish delineating 80 percent of that acreage.