From The Wall Street Journal (Russell Gold):
Echoing industry concerns, Mr. Hackett said he is worried that anti-drilling sentiment could prevent the projected expansion. The energy industry’s use of hydraulic fracturing, in particular, has prompted concerns about pollution; the federal government and several states are studying whether new regulations on water use and air emissions are needed…
Anadarko on Monday said that results from 11 recent wells in the Wattenberg field have given it confidence that it can drill between 1,200 and 2,700 wells in northeast Colorado. It plans to drill about 160 wells next year. Based on its early results, it expects its wells will ultimately yield between 500 million and 1.5 billion barrels of oil, natural gas liquids, and natural gas. Finding a billion barrel field is extremely rare. Only a handful of billion barrel fields have ever been found in the U.S…
Recently, companies such as Anadarko and Carrizo Oil & Gas Inc. and Noble Energy Inc. have been applying horizontal wells and hydraulic fracturing in the Wattenberg, breathing new life into the field and leading to a reappraisal of its future oil and gas potential. Anadarko says it expects its production from the region to grow at a compound annual rate of 20% between 2010 and 2012. It produced about 72,400 barrels of oil equivalents there in the last quarter.
The company also said it plans to evaluate whether new technologies can be used to extend the discovery farther north into Wyoming where recent drilling results are more hit-and-miss. Some well results have been quite good, but others have not found enough oil or gas to be considered commercial successes.
Here’s a release from Governor Hickenlooper (Eric Brown/Megan Castle):
Gov. John Hickenlooper released this statement today after Anadarko Petroleum Corp. announced it plans to add more than 1,200 drilling locations in the Wattenberg field in northeastern Colorado:
“Anadarko’s announcement today shows once again that Colorado is a leader in the energy sector of our country’s economy. We are thrilled to see the company plan a significant investment in Colorado. This expected growth will create jobs and make more revenues available to local communities. We look forward to supporting Anadarko, its workforce of 1,000 people already here and the thousands of contractors it hires throughout the state.
“We also continue to work proactively to maintain the highest safety and environmental standards for oil and gas companies in Colorado, while also cutting permit times and making it easier and more predictable to develop natural gas and oil here. Anadarko’s future expansion in Colorado, on top of our effort last week to launch a multi-state initiative aimed at developing natural gas-fueled vehicles, is further evidence that Colorado is at the center of energy development in this country.”
More coverage from Mark Jaffe writing for The Denver Post. From the article:
“This is going to have huge implications for the economy of Colorado,” said Pete Stark, vice president for industry relations at IHS, a Denver-based consulting firm. A reserve that size could generate 150,000 barrels a day and, assuming oil is $80 a barrel, provide more than $4 billion in annual revenues, Stark estimated. The total value of goods and services produced in the state in 2010 was $235.15 billion…
Anadarko’s wells had initial production averages of 800 barrels a day — with the best well producing 1,100 barrels a day. The wells were drilled in the Niobrara formation, which is more than 6,000 feet deep and runs from El Paso County to the Wyoming border…
Anadarko said it also found oil in the neighboring Codell formation…
The Anadarko estimate is just for the 100-square-mile Wattenberg Field, which includes Weld County and small parts of Adams, Broomfield, Boulder and Larimer counties. Anadarko is also doing exploratory drilling in Arapahoe County, and Chesapeake Energy has filed plans to drill in Elbert and Douglas counties. Ultra Petroleum is set to drill exploration wells in El Paso County.
More coverage from David O. Williams writing for the Colorado Independent. From the article:
Groups like Clean Water Action have been actively campaigning ahead of a new boom in the Niobrara formation, which stretches from Denver to Wyoming along the densely populated Front Range of Colorado. An official for the group on Monday called Anadarko’s announcement a “mixed bag” of economic benefit and potential pollution.
CWA’s biggest concern? Hydrayulic fracturing, or fracking, which injects millions of gallons of water mixed with sand and undisclosed chemicals under high pressure into natural gas and oil wells to break up tight geological formations and free up more oil and gas.
“What does fracking bring to communities where wells are drilled?” Clean Water Action asks on its website. “Fracking brings wells 200 feet away from the backyards and parks where our children play. It brings water and air pollution from wells and open chemical pits, wastewater laced with toxins, and soot from hundreds of construction vehicles. Fracking brings new gas and income to the communities, but at what cost?”[…]
There has been a growing debate over local control versus state authority versus federal oversight of the oil and gas industry. Cory Gardner, the Republican congressman who represents Colorado’s 4th Congressional District, including Weld County, has consistently tried to strip away the authority of the U.S. Environmental Protection Agency (EPA) since being elected last year. Anadarko has contributed to Gardner’s election campaigns.
More coverage from the Financial Times (Ed Crooks):
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Chuck Meloy, the company’s senior vice-president for worldwide operations, said the discovery was “located right in the heart of one of our existing core areas”. Anadarko and its predecessor companies have been operating in that part of Colorado for more than 30 years but until now had used only vertical wells. This year, it began using horizontal wells, which bend and extend laterally away from the rig. Coupled with hydraulic fracturing – pumping water, sand and chemicals into the well at high pressure to crack the source rock – horizontal drilling is enabling production at commercially viable rates from oil and gas reserves that were previously uneconomic…
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Mr Meloy said Anadarko expected the field “to quickly become a self-funding, significant cash flow generator.” With US crude prices at about $98 per barrel and gas prices at less than $3.50 per million British thermal units – less than a quarter of the price of oil for the same energy content – liquids production is much more commercially attractive.
More coverage from Cathy Proctor writing for The Denver Business Journal. From the article:
“We’re very excited by what we see in the horizontal activity that we’ve had to date,” said John Christiansen, a spokesman for Anadarko (NYSE: APC), in an interview…
“Everything you could possibly want in a play — this has it. It’s great news for us and for Colorado because it’s going to generate a lot of activity and investment for a number of years,” Christiansen said.