WPX ups rig count in Piceance to seven 
as price of gas rises 


WPX Energy said Wednesday it plans to operate seven rigs locally for the rest of the year, up from a previously announced five-rig plan for the year, thanks to rising natural gas prices.

The additional two rigs will result in an additional $60 million in capital spending in the Piceance Basin this year, the company said in a news release.

“Now’s the right time for us to accelerate our natural gas production and the Piceance is the right place to start,” Ralph A. Hill, WPX’s president and chief executive officer, said in the release. “Natural gas prices are stronger, and this helps lay the groundwork for our 2014 development.”

The company already had added two additional rigs beyond the projected five for this year, and the announcement means it won’t be releasing them, local spokeswoman Susan Alvillar said.

The U.S. Energy Information Administration indicates that natural gas prices have topped $4 per million British thermal units this year, having risen in fits and starts from below $2 in early 2012. However, prices remain far below 2008 levels that topped $13 per million Btu.

Drilling activity in Garfield County, the center of Piceance Basin activity, had fallen from a peak of 64 rigs in 2008 to seven at the end of last year. A dozen rigs are now operating in the county, and one more each in Rio Blanco and Mesa counties. As of April 26, drilling had begun on 131 wells this year in Garfield County, putting it behind pace to equal last year’s total well starts.

Doug Hock, spokesman for Encana USA, the other major oil and gas operator in the basin, said Wednesday his company is continuing with its plans to run a five-rig program locally this year, taking advantage of third-party joint ventures that provide Encana with upfront capital.

WPX also is continuing with plans to drill four horizontal wells this year in the Niobrara shale, which lies deeper than the sandstone formations where most local drilling is focused. After drilling, it is working to delineate the reach of its Niobrara natural gas holdings.

Encana drilled more than 20 wells into the Niobrara before this year, and the information it gained on how to optimize gas extraction from that formation will provide it further opportunity in the Piceance when prices rise, Hock said.

Hill said that in the Piceance Basin, WPX has “everything in place there to be among the first and fastest to increase our production. We have the permits, favorable processing contracts, take-away transportation capacity and large-scale, low-cost, efficiency-driven operations to yield attractive returns.”

Those efficiencies have included the ability to drill a local well in as little as 3.7 days, the company said.


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