NAPE: Rockies gas output just starting to decline

By OGJ editors
HOUSTON, Aug. 26 -- Rocky Mountain operators are just now seeing natural gas production begin to decline, almost a year after they began idling drilling rigs as prices at the wellhead plummeted.

Prices may fall even farther, however, because the volume of gas in underground storage is above the average of the last few years and Colorado figures show production was still growing in this year’s first and second quarters, said Alan Harrison, vice-president, Denver region/Piceance basin, Williams Exploration & Production Co., Tulsa.

The Colorado rig count peaked at 140 in the second half of 2008 and fell to a low of about 40 in recent weeks, Harrison noted at the Summer NAPE E&P Forum in Houston. Williams, lead operator in the Piceance basin in Garfield County, Colo., is running 8 rigs, down from 28.

Various operators have shut-in at least 300-350 wells in each of the Barnett, Piceance, and Fayetteville plays, said Bob Fryklund, vice-president, IHS-Cambridge Energy Research Associates.

Harrison predicted that the rate of decline will steepen fairly rapidly but didn’t estimate a time frame.

In the Piceance valley area, Williams has driven costs down to a low of $1.6 million/8,000-ft well by drilling as many as 22 wells/pad, pumping frac jobs from 2 miles away from the rig, and drilling, completing, and producing gas simultaneously from the same pad, Harrison said.

It also built a 3,200-ft tunnel and a road with drillsites along switchbacks to access 60 otherwise undrillable locations in the highlands part of the basin.

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