WPX to develop San Juan Gallup oil discovery

WPX Energy Inc., Tulsa, will drill 8-10 development wells in New Mexico in 2013 near a San Juan basin oil discovery at which the first four wells flowed at commercial rates from Cretaceous Gallup sandstone.

Maximum rates at the first four wells were 488, 623, 1,004, and 800 boe/d. The company said it has already spudded three of the development wells. WPX is drilling 4,300-ft laterals in Gallup at 5,400 ft true vertical depth.

The company didn’t give the location of the discovery but said it is in an area of the basin that is not subject to seasonal closures. The company expects the new field to be producing 3,400 boe/d by yearend. It trucks the oil to a nearby pipeline injection point.

WPX said it has nearly 100% working interest in more than 31,000 net acres of leases in the oil window of the basin for its Gallup sandstone development and is attempting to expand its holding. The company’s initial estimate of resource potential on the existing acreage is 66 million boe.

Personnel at WPX’s Aztec, NM, office in 2010 drilled the first two Mancos shale horizontal wells in the San Juan basin and made a significant natural gas discovery. That operation yielded a data set that has led to the company’s Piceance basin Niobrara gas discovery in Colorado and the new San Juan Gallup oil production.

Overall, WPX has 159,000 net acres under lease in the San Juan basin, including 75,000 acres underlain by the Cretaceous Mancos formation. Historically, WPX has developed gas in the San Juan, where it operates 880 gas wells and holds a joint ownership interest in another 2,400 wells.

Meanwhile, WPX continues to plan to drill four horizontal Niobrara wells in the Piceance basin in 2013 as a first step in the delineation of the company’s Niobrara discovery (OGJ Online, Jan. 23, 2013).

The Niobrara shale discovery well has produced 1.4 bcf of gas in its first 180 days and is making 4.4 MMcfd at 2,300 psi flowing tubing pressure. WPX has drilled its second Niobrara well and expects to complete it in August. It spudded the third well July 12 and expects to drill 10-12 wells in 2013 to complete delineating 80% of its Piceance Valley acreage.

The drilling rig burns natural gas, which reduces fuel costs by more than 80% versus diesel. WPX expects to convert four more Piceance rigs this year by adding engines that use both either gas or diesel.

WPX believes the Niobrara is prospective throughout its 180,000 net acres. The company expects to finish a 24,000-acre 3D seismic survey by mid-2014 that will brings its total 3D coverage to more than 65% of the Valley acreage.

The company said its Piceance basin NGL production fell 34% on the year to 19,700 b/d due to lower ethane recovery rates. WPX’s ethane recovery rate in the quarter ended June 30 was 37% compared with 74% a year ago.

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