Chevron signs processing agreement for Piceance basin production

By OGJ editors
HOUSTON, Nov. 15 -- Chevron USA Inc. has entered into a long-term agreement with Enterprise Gas Processing LLC for the gathering and treatment of natural gas produced from Chevron's Piceance basin operations in western Colorado.

Under the agreement, Enterprise will process all gas produced by Chevron from its Piceance program at its 750 MMcfd Meeker, Colo., gas processing facility, which lies 26 miles north of Chevron's development. Gas production will be transported through Enterprise's 48-mile, 36-in. Piceance Creek gathering system to the Meeker facility, which was placed into service in October.

The Meeker facility also has the capability to extract as much as 35,000 b/d of natural gas liquids. Phase II, which will double capacity of the facility to 1.5 bcfd of gas and 70,000 b/d of NGLs, is projected to begin operations in the summer of 2008.

Initial volumes from Chevron's Piceance production are slated to be 50 MMcfd starting in 2008.

Under the terms of a separate transportation and fractionation exchange agreement, Enterprise will transport Chevron's mixed NGLs extracted at Meeker through its Mid-America Pipeline (MAPL). In the third quarter, Enterprise completed an expansion of MAPL, adding 50,000 b/d of incremental capacity.

Chevron began its Piceance basin drilling program with a 13-well delineation program in 2005 on 33,000 acres that it owns on Colorado's western slope. Two purpose-built rigs began drilling the first development wells this summer, using extended-reach directional drilling techniques that will allow Chevron to complete up to 22 wells from a single pad. The entire development program may involve more than 2,000 wells and could last from 10 to 15 years, with production operations continuing for several decades.

Enterprise has already executed agreements totaling more than 2 bcfd of gas with six of the 12 largest producers in the region.

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