Anadarko Petroleum to pump millions into Weld County oil, gas drilling | MyWindsorNow.com

Anadarko Petroleum to pump millions into Weld County oil, gas drilling

Sharon Dunn
sdunn@greeleytribune.com

Weld County's largest oil and gas operator and employer plans to pump almost $1 billion into its Colorado operating program this year, but it's facing a smaller piece of the pie in the face of some hot competition down south.

Anadarko Petroleum Corp. officials announced in an investor call Wednesday the company would beef up its spending this year in the Denver-Julesburg Basin — the prolific drilling area encompassing all of Weld County and stretching into Wyoming and Nebraska — to $840 million. It's been two years since company spending has even come close to that level. In 2015, Anadarko allocated between $4.86 billion to $5.1 billion to spread among all its U.S. drilling fields.

Company officials still see the DJ as a jewel in their crown, even as they turn a lot of attention to its Delaware basin in west Texas.

"The DJ playbook is tremendously successful," said Brad Holly, senior vice president, of U.S. onshore exploration and production for Anadarko, which is based in Denver.

“Just from a DJ standpoint, when you can operate in a field and shift your entire program to horizontal drilling five years ago, and it keeps getting more efficient and increases resources, that’s pretty exciting. It gives you a longer lived asset, one that’s already been producing, and it just continually seems to get better. … It’s great for the economy and the folks who depend on the industry.

— John Christiansen, spokesman for Anadarko Petroleum

What that means for Weld is more work. The company added five drilling rigs to the field from the one it operated last year. Each rig brings with it the equivalent of 100 jobs to the area. And Anadarko plans to drill almost 300 new wells this year, which translates to steady work.

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"Just from a DJ standpoint, when you can operate in a field and shift your entire program to horizontal drilling five years ago, and it keeps getting more efficient and increases resources, that's pretty exciting," said John Christiansen, spokesman for Anadarko. "It gives you a longer lived asset, one that's already been producing, and it just continually seems to get better. … It's great for the economy and the folks who depend on the industry."

For Anadarko, the DJ has been the cornerstone of its U.S. onshore drilling program since 2010, when the coupling of horizontal drilling and hydraulic fracturing brought new life to Weld's 40-year-old oil fields. The DJ is part of the company's new strategy called the three Ds of its U.S. drilling program, which includes the Delaware basin in Texas and its deep water Gulf of Mexico assets.

The DJ basin used to command the lion's share of Anadarko's capital spending. Just two years ago, the company tied up 50 percent of U.S. onshore spending in the basin.

The past year, however, has seen less of a shine on Weld operations, as Anadarko has pumped a larger share of money — and increasingly drilling rigs — into its growing Delaware basin assets.

To be fair, however, Anadarko's 2017 spending plan for the DJ is a hefty sum. The DJ will get a large portion of the company's onshore spending this year with $840 million, a massive surge from last year, when the DJ operators had to claw for their share of a $1.1 billion pie and limp along with one drilling rig.

But the Delaware will get $820 million for development, plus another $s560 million for its company that develops pipeline networks to transport petroleum products to market — what is commonly called midstream. The Delaware is in its infancy with the company, and that means building infrastructure to the point where the DJ is today.

Company chairman, president and CEO Al Walker told investor analysts Wednesday the Delaware and the DJ are the "two best onshore oil levered basins for investment returns in North America.

"Over the next five years, we expect to more than double our production from these two plays, where we currently produce 300,000 barrels of oil equivalent per day," Walker said. Barrels of oil equivalent refers to the liquids that come out of a well: crude, natural gas, and other liquids such as ethane and butane.

"By 2021, we expect to produce 1 million barrels of oil equivalent per day," Walker said.

Walker said the two basins together are poised to pump massive amounts of oil alone in the next four years, as much as 600,000 barrels per day by then.

He hinted at the idea that continued improvement in efficiencies and technology could put Anadarko on the forefront of a global sea change in how the industry recovers its fossil fuels. The company last fall brought on a new team with an approach like that of Silicon Valley that will be focused on improving efficiencies through technology.

"On the horizon, our use of potentially game-changing developments we are in the early stages of deploying, with big data analytics, artificial intelligence and machine learning could alter the way we explore, develop and produce energy, not just in these two plays, but globally," Walker said.

Anadarko Petroluem’s 2017 capital spending plan on the 3 Ds:

In the Denver-Julesburg Basin (in Colorado, that’s all drilling in Weld County):

» $840 million.

» 290 wells.

» 5-6 drilling rigs.

In the Delaware Basin in west Texas:

» $820 million.

» $560 million for upstream infrastructure

» 150 wells

» 10-14 drilling rigs.

Deep water Gulf of Mexico, international assets

» $1.1 billion (plus Algeria and Ghana).

» 10 exploration/appraisal wells (Gulf, Ivory Coast and Colombia)

Source: Anadarko Petroleum Corp.

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