ExxonMobil to slow Rio Blanco drilling

RIFLE — ExxonMobil plans to significantly scale back its Piceance Basin drilling program at least temporarily as it nears its initial goal for local natural gas production.

The company plans to cut back from five rigs to two during the next seven months in Rio Blanco County. Company officials say its immediate plans after that are unclear, but it continues to be committed to eventually drilling thousands of local wells.

“Our long-term plans remain unchanged,” said J.D. Estes, an ExxonMobil spokesman.

The company has drilled 300 wells to date and is nearing its initial target of producing 200 million cubic feet of gas per day, senior field superintendent Joe Bob Duncan said Thursday during the quarterly Northwest Colorado Oil and Gas Forum in Rifle.

ExxonMobil said its long-term production eventually could reach 1 billion cubic feet per day. It holds oil and gas interests in 300,000 acres in the basin, 90 percent of which are federal lands.

The short-term cutback comes as ExxonMobil is increasing its local staffing from 56 to 73 employees to keep up with the operational and production demands associated with wells drilled to date.

Between gas development and related projects such as pipeline construction, ExxonMobil currently averages about 850 workers on location, most of them contractors. Company officials couldn’t say Thursday how much the rig cutbacks would reduce those numbers.

Estes said multiple factors dictate levels of drilling activity, and he couldn’t pinpoint what role specific considerations such as soft natural gas prices might have played in the decision to cut rigs.

Colorado regulators remain on track to issue 6,500 drilling permits this year, which would be the second-most ever.

And western Colorado’s Piceance Basin continues to account for about half of the permits being issued, said David Neslin, director of the Colorado Oil and Gas Conservation Commission.

But low natural gas prices continue to be a constraint for companies, he said.

Companies’ responses to market conditions continue to be mixed, based on reports from company representatives Thursday.

Williams, which now has 12 local rigs, is continuing to consider adding another one. EnCana Oil & Gas (USA) Inc. hopes to add a seventh rig soon and possibly one more by the end of the year. Bill Barrett Corp. said it may add a third rig next year.

Marathon Oil released its one local rig in June and is focusing its investment on oil projects elsewhere due to low natural gas prices, said Mike Suek, local operations manager. Chevron has yet to resume drilling since area gas development slowed down last year.

Laramie Energy II and Antero Resources each plan to continue running one rig, and Occidental Petroleum plans to add a second rig to the one it is now operating.


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