Gas giant ramping up its projects in Piceance
At a time of general contraction in energy developers’ drilling operations in western Colorado’s Piceance Basin, one company working fairly quietly in Rio Blanco County has been proving to be the exception to the rule.
That company is none other than energy giant ExxonMobil, which this week became more vocal about its ambitious natural gas development project in the county.
The company this week announced completion of new gas processing facilities with the ability to handle up to 200 million cubic feet per day. On Tuesday, it invited area government officials and others to see its Piceance Basin operations off County Road 5 southwest of Meeker and hear about a drilling program that currently involves six rigs.
That makes it one of the most active current energy developers in the basin.
Besides producing gas and generating jobs, that activity is resulting in other benefits that include a newly announced contribution of $590,000 to the Meeker School District to improve math and science education.
Of that, $350,000 will fund a lab at the new elementary school and an interactive whiteboard system for various schools, and help pay for a district math and science coach and coordinator. The rest will provide funding for a collaboration between the district and Colorado School of Mines to improve math and science education at the elementary school.
“We really hope it will be a shining star for Colorado, this new program,” said Jim Branch, ExxonMobil’s Piceance Project executive, in announcing the funding Tuesday.
Tuesday’s luncheon and operational tour also served as a chance for ExxonMobil officials to shine a spotlight on what the company considers to be a world-class resource for it. It owns Piceance Basin drilling rights on about 300,000 acres, 90 percent of which is beneath federal land. The company estimates its acreage to hold a potential recoverable resource of 45 trillion cubic feet of gas, enough to heat 50 million homes for more than a decade.
ExxonMobil says its reserves are some of the richest in the Piceance Basin, but also some of the deepest, requiring wells to be drilled 12,000 feet underground. To help reduce production costs, the company has been implementing proprietary technology such as a process that increases drilling speed by improving efficiencies.
An approach it has been developing specifically for the Piceance Basin is its multi-zone stimulation technology. The technology enables the company to hydraulically fracture gas-producing zones at multiple depths down a well simultaneously, speeding up the process that unlocks gas from rock and causes it to flow.
The approach also drains gas from a larger area, enabling ExxonMobil to get by with one well every 20 acres, rather than having to drill at 10-acre spacing as is common in the basin. That reduces the project’s costs and impacts.
While other companies have sharply curtailed or in some cases even suspended local drilling operations, ExxonMobil’s local rig count hasn’t changed much over the last year.
Company officials say its commitment to the project is a long-term one, so the project isn’t at the mercy of short-term swings in energy prices like the one that caused the current drilling slowdown.
Its six rigs are drilling about 60 to 70 wells a year, and it has about 160 wells in production in the basin. It had prior processing capacity of 50 million cubic feet per day, but with its newly expanded capacity it now is producing about twice that. That expanded capacity is partly a result of a new central treatment facility that is owned and operated by Enterprise Products and under long-term contract to ExxonMobil.
Mike Smith, ExxonMobil’s Piceance project manager, said it could be producing at its new total capacity of 250 million cubic feet per day within a couple of years. ExxonMobil already is evaluating adding more processing capacity, and says its long-term production in the basin could reach 1 billion cubic feet per day.
Other companies are well ahead of ExxonMobil in terms of current Piceance Basin gas production, but it has been producing gas in the basin for nearly 50 years through predecessor companies such as Mobil. Although its new project has had to undergo recent environmental review by the Bureau of Land Management, some of its federal leases go back decades, and the company says it has been working for many years to develop the technological approach it is beginning to implement locally.
Rio Blanco County Commissioner Ken Parsons said ExxonMobil has been a “stabilizing influence” on the local economy.
“They’re a very deliberative type of company. They’ve taken this at a very measured type of pace,” he said.
Richard Alward, a Colorado Oil and Gas Conservation Commission member from Grand Junction, said ExxonMobil’s project appears to be well-planned to produce gas in a way that will minimize social and environmental impacts.
“They’ve got all the pieces in place ahead of time,” he said.