WPX Energy makes natural gas discovery in Niobrara formation

WPX Energy

Tulsa, OK-based oil and gas exploration and production company WPX Energy Inc. (NYSE:WPX) said January 22 that a recent Niobrara gas discovery in western Colorado has the potential more than double the company’s current 18 trillion cubic feet equivalent of 3P reserves.

The discovery well produced an initial high of 16 million cubic feet per day at a flowing pressure of 7,300 pounds per square inch.

The well has since been choked back substantially to optimize reservoir performance and ensure maximum resource recovery. Over the past 30 days, it produced at an average rate of 12 million cubic feet per day.

WPX Energy, the exploration and production spin-off of Williams, came in at No. 17 in the latest OGJ150 report for the top revenue earners of 2Q 2012. The company holds lease rights to approximately 180,000 net acres of the Niobrara/Mancos shale play that underlies the company’s leasehold position in the Piceance Basin.

Substantial gathering and processing infrastructure is in place to accommodate additional gas volumes from the area, as is take-away capacity from the basin. Gas produced from the Niobrara and Mancos shales can be processed without modification to existing gas treatment facilities.

“We have a large-scale position in the Piceance, where we are the lowest-cost, most efficient producer in the basin. We know the Piceance is a world-class asset. Now the results of our Niobrara well are showing that our acreage has even greater reserves potential,” said Ralph A. Hill, president and CEO.

“This exploratory work in the Niobrara and Mancos shales of the Piceance was a logical follow-on to our previous Mancos shale discoveries in the San Juan Basin.

“In the latter half of 2010, we drilled two horizontal discovery wells there that produced at high rates from the same reservoir that we’re delineating in the Piceance. The San Juan results already added 1.3 trillion cubic feet of proved, probable and possible reserves to WPX,” Hill added.

The Niobrara and Mancos shales are generally located at depths of 10,000 to 13,000 feet. The Williams Fork is a shallower formation, generally located at depths of 6,000 to 9,000 feet. In the Piceance Basin, WPX holds an average working interest of 66% in the Niobrara and Mancos shales.

WPX plans to drill at least two more horizontal Niobrara wells in the Piceance Basin this year, pending permits, starting within a six-mile radius of the first well.

WPX’s first Niobrara horizontal well is located on the company’s existing Piceance Valley acreage in Garfield County. It was drilled to a total vertical depth of 10,200 feet with a 4,600-foot horizontal lateral.

Drilling operations commenced in August 2012 during which the company successfully recovered 535 feet of continuous core. Completion operations, including 17 frac stages, were completed in December.

Steven G. Natali, senior vice president of exploration for WPX, commented, “Advances in horizontal drilling and the way that our completions engineers apply multi-stage fracture technology means that much of this gas can eventually be brought to the surface at an economic rate.”

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