Weld County’s two largest oil and gas drillers have updated their production levels for the last few months of the year, noting increased drilling efficiencies without spending more money.
Both Anadarko Petroleum and Noble Energy — which together account for most of Weld’s production — this month have issued updates to production reports for the fourth quarter, as crews have improved wells in and outside Colorado.
The updates for these public companies are required by the Securities and Exchange Commission. Every year, the companies report expected production rates; when those change in any way, the reporting needs to be updated.
On Thursday, Anadarko reported a 2 million-barrels-of-oil-equivalent increase throughout its portfolio, which spans the globe. The primary drivers of the increase, however, are its assets in Weld and in the Delaware Basin in Texas, according to a company news release. Barrels of oil equivalent means the total volume of a well’s production, which includes crude, natural gas and natural gas liquids such as butane and ethane, all of which are sold in their respective markets.
As a glut of global oil has continually put downward pressure on crude prices, companies have had to work harder to save money. They’ve done it by finding better ways to produce a well through drilling rig technology or finding the right mix of materials to help wells produce better, all of which have reduced production costs. The numbers this quarter prove the measures are working, which will put companies in advantageous positions when the market rebounds.
“I think we’ve been drilling in the Wattenberg for so long that I think the results we’re seeing are expected,” said John Christiansen, vice president of corporate communications at Anadarko in Houston, Texas. “We know the reservoirs well, but what we continue to refine and improve is the completion process and how much we ultimately recover. As that continues to evolve, I wouldn’t call it shocking, but it’s certainly a field that continues to get better.”
Noble Energy reported in a release earlier this month that drilling and completion efficiencies contributed to a 15-million-barrel-of-oil-equivalent increase over its production guidelines. The company pointed to its assets in Texas and Colorado as drivers of the increase, as well.
“We are finishing 2015 with tremendous operating momentum and performance across the business,” said Gary Willingham, Noble’s executive vice president of operations, in a release. “The company’s 2015 capital budget remains unchanged, and fourth-quarter capital will be the lowest quarterly spend of the year. We’ve positioned the company to operate within cashflow while still being able to deliver modest pro-forma annual volume growth in 2016.”
The reports come after third-quarter reports that Anadarko and Noble were reducing capital spending by millions after reporting massive losses. Companies that can are putting their assets in the Wattenberg and curtailing work in other areas, such as the Marcellus in Pennsylvania. Noble all but shut down its natural gas drilling program in the Marcellus until prices improve, and had two layoffs across the country this year.
Anadarko is in a bit better position in its drilling program in Colorado because it owns the minerals it drills. Many companies lease the minerals and must pay royalties to the mineral owners.
To save money this year, Anadarko opted to drill 200 wells, but held off on producing them until next year, or when markets return.
“That provides us flexibility going forward, depending on where you find yourself in the commodities price environment,” Christiansen said.
That doesn’t stop the continual improvements companies strive for on every part of the process.
“Every well you drill you get better, and we’re seeing that, particularly with efficiencies we’ve been able to gain, cost reductions we’ve been able to achieve and just getting better and better the more wells we drill,” Christiansen said.
Regardless of the improvement locally, overall U.S. production has been going down this year, according to the U.S. Energy Information Administration.
December production in the Niobrara region, which includes all of the Rocky Mountains, fell 24,000 barrels of oil from November, according to the EIA drilling productivity report. Across the country, the drop was 60,000 barrels of oil.
But Wattenberg production is clearly increasing, even amid a downturn.
“You have to look at it on a portfolio basis,” Christiansen said. “If you look at overall volumes and capital we’ve invested, it is a reduction from last year, and volumes are relatively flat. But the Wattenberg is one where we’re drilling the same amount of wells. We’re just increasing recovery.”
This article was written by Sharon Dunn from Greeley Tribune, Colo. and was legally licensed through the NewsCred publisher network.