WPX forced to halve local drilling rigs

By Dennis Webb
Monday, February 6, 2012

WPX Energy today said it would be operating just five drilling rigs in the Piceance Basin this year, down from 11 up until late last year.

WPX, a new company created at the start of the year after Williams split off its oil and gas exploration and production business, said the cutback is due to low natural gas prices and it also is cutting its drilling plans in the eastern United States.

WPX is the leading local natural gas producer.

Last year, prior to the drop in prices, Williams had forecast 11 rigs operating this year in the Piceance. WPX spokeswoman Susan Alvillar said Williams cut its local rig count by three late last year. That leaves WPX with eight, and three more to cut.

“We’re in the same boat as every other natural gas producer. Gas prices have been low and it still costs the same amount of money to drill wells,” she said.

The U.S. Energy Information Administration last week reported that the price for natural gas at the Henry Hub in Louisiana had fallen to $2.32 per million British thermal units. It was nearly $5 at the middle of last year. A mild winter has reduced demand for gas for heating, while domestic production has been increasing.