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Released August 19, 2013 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Anadarko Petroleum Corporation (NYSE:APC) (The Woodlands, Texas) is working to align its rising Oil & Gas Production from Colorado's Wattenberg Field with the company's local infrastructure. But the company also is working to counter Colorado's growing concern about hydraulic fracturing, Brad Holly, Anadarko's vice president for Rockies Operations, told attendees at The Oil & Gas Conference 18.
"We've had absolutely outstanding production in the Wattenberg Field," Holly told attendees at the conference, sponsored by EnerCom Incorporated (Denver, Colorado). "Production is basically moving straight up. Right now, we're working to expand the infrastructure so that our production is aligned with our infrastructure. I can't say enough good things about the Wattenberg."
Anadarko operates vertical and horizontal oil and gas wells in the Wattenberg Field, north of Denver. Holly projected the company will increase overall production there this year 32% over 2012 on a barrel-equivalent basis, to about 120,000 barrels of oil equivalent per day (boe/d) this year from about 90,000 boe/d in 2012.
Click the icon at right to see Anadarko's oil & gas production from the Wattenberg Field from 2008 through 2012, with an estimate for 2013.
Horizontal drilling will account for slightly under half of this year's production from the Wattenberg, the company predicted. In its second-quarter earnings conference call, Anadarko said horizontal drilling accounted for about 55,000 boe/d through the quarter that ended June 30, 2013.
Anadarko plans to invest about $3 billion over 2013 and 2014 to increase production and infrastructure in the Wattenberg. Giving the burgeoning production in that field, the company also has been working to align its production with its Transmission and Terminal assets there, Holly told the EnerCom conference. The company has a variety of infrastructure projects under way to add more compression, gathering and processing capacity to the Wattenberg.
Right now, Anadarko has about 85,000 barrels per day (BBL/d) of outbound oil takeaway capacity in the Wattenberg, but by mid-2014, that is projected to swell to 245,000 BBL/d, an increase of 188%. Anadarko's major oil infrastructure projects in the area include:
Click the icon to see Anadarko's oil takeaway capacity in the Wattenberg through early 2014.
On the gas side, Anadarko has two major projects under way in the Wattenberg:
Click the icon to see Anadarko's gas oil processing capacity in the Wattenberg through early 2014.
In his talk at the EnerCom conference, Holly credited Anadarko's success in the Wattenberg and elsewhere to a cultural emphasis on safety and continuous improvement. "There are a lot of companies and a lot of assets that can be profitable when gas is $6 per million cubic feet (Mcf). What about when gas is priced at $2? We aim to be competitive at almost any price. Our goal is to be the last operator to leave a play."
One way Anadarko operationalizes that aspect of its culture is an ongoing effort to benchmark itself against competitors as well as against itself. "We are really motivated by continuous improvement," Holly said. "We compete with ourselves to see how we could do better. We want to know how we could save 15 minutes off a process."
Anadarko has found a lot of operational efficiency by working with a limited number of drillers. In the Eagle Ford Shale, for example, Holly said Anadarko worked with 13 different drilling companies when it drilled its first 500 wells there. By contrast, a competitor worked with 43 different drillers on its first 500 wells in that formation. He said close collaboration with a small group of strategic partners helps shave time and reduce field accidents.
Shareholders have greatly benefitted from Anadarko's focus on operational improvement, cost control and finding large oil & gas projects in the U.S. and overseas. The stock has risen more than 160% since mid-2010, to its current level of about $94 per share. After announcing strong second quarterlty results, Anadarko doubled its common stock dividend.
But Holly expressed concern that the good news coming out of the Wattenberg could be wiped out if Colorado voters support anti-hydraulic fracturing initiatives in November. "We are very concerned about anti-fracking sentiment in Colorado," he told the conference. "Across the state, there are five local ballot initiatives to limit or prohibit hydraulic fracturing. This will be a huge issue locally in 2013, and next year it could become a statewide issue."
"We expect these initiatives will get a lot of press as we get closer to November," he continued. Coloradans enjoy energy costs that are 25% below the national average in large part because of the success of hydraulic fracturing, Holly added. The Anadarko executive said the oil & gas industry employs more than 100,000 Coloradans, whose livelihoods could be threatened by ballot initiatives that clamp down on hydraulic fracturing.
"We know we have the science firmly on our side," Holly said. "Hydraulic fracturing has been used for decades. It can be done safely and in a way that protects the environment. We have been actively engaged in outreach on these issues in communities where we operate, and we need to continue working to get that message out."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"We've had absolutely outstanding production in the Wattenberg Field," Holly told attendees at the conference, sponsored by EnerCom Incorporated (Denver, Colorado). "Production is basically moving straight up. Right now, we're working to expand the infrastructure so that our production is aligned with our infrastructure. I can't say enough good things about the Wattenberg."
Anadarko operates vertical and horizontal oil and gas wells in the Wattenberg Field, north of Denver. Holly projected the company will increase overall production there this year 32% over 2012 on a barrel-equivalent basis, to about 120,000 barrels of oil equivalent per day (boe/d) this year from about 90,000 boe/d in 2012.
Click the icon at right to see Anadarko's oil & gas production from the Wattenberg Field from 2008 through 2012, with an estimate for 2013.Horizontal drilling will account for slightly under half of this year's production from the Wattenberg, the company predicted. In its second-quarter earnings conference call, Anadarko said horizontal drilling accounted for about 55,000 boe/d through the quarter that ended June 30, 2013.
Anadarko plans to invest about $3 billion over 2013 and 2014 to increase production and infrastructure in the Wattenberg. Giving the burgeoning production in that field, the company also has been working to align its production with its Transmission and Terminal assets there, Holly told the EnerCom conference. The company has a variety of infrastructure projects under way to add more compression, gathering and processing capacity to the Wattenberg.
Right now, Anadarko has about 85,000 barrels per day (BBL/d) of outbound oil takeaway capacity in the Wattenberg, but by mid-2014, that is projected to swell to 245,000 BBL/d, an increase of 188%. Anadarko's major oil infrastructure projects in the area include:
- White Cliffs Crude Oil Pipeline Expansion, which will add about 80,000 BBL/d of outbound pipeline capacity to the pipeline's existing 70,000 BBL/d. This expansion project is expected to be completed in the first half of 2014.
- Tampa Crude Oil Railcar Loading Terminal, a $90 million, 65,000-BBL/d grassroot project scheduled to begin operating during the first of 2014.
- Doubling of the capacity of the Carr, Colorado, rail loading facility, to 30,000 BBL/d from 15,000 BBL/d. This project is scheduled to be online later this year
Click the icon to see Anadarko's oil takeaway capacity in the Wattenberg through early 2014.On the gas side, Anadarko has two major projects under way in the Wattenberg:
- Walsenberg Front Range Grassroot NGL Pipeline, a $370 million grassroot project scheduled to come online by the end of 2013
- Lancaster Grassroot Natural Gas Processing Plant, a $70 million, 300 million-cubic-feet-per-day (MMCF/d) grassroot project scheduled to begin operating in early 2014
Click the icon to see Anadarko's gas oil processing capacity in the Wattenberg through early 2014.In his talk at the EnerCom conference, Holly credited Anadarko's success in the Wattenberg and elsewhere to a cultural emphasis on safety and continuous improvement. "There are a lot of companies and a lot of assets that can be profitable when gas is $6 per million cubic feet (Mcf). What about when gas is priced at $2? We aim to be competitive at almost any price. Our goal is to be the last operator to leave a play."
One way Anadarko operationalizes that aspect of its culture is an ongoing effort to benchmark itself against competitors as well as against itself. "We are really motivated by continuous improvement," Holly said. "We compete with ourselves to see how we could do better. We want to know how we could save 15 minutes off a process."
Anadarko has found a lot of operational efficiency by working with a limited number of drillers. In the Eagle Ford Shale, for example, Holly said Anadarko worked with 13 different drilling companies when it drilled its first 500 wells there. By contrast, a competitor worked with 43 different drillers on its first 500 wells in that formation. He said close collaboration with a small group of strategic partners helps shave time and reduce field accidents.
Shareholders have greatly benefitted from Anadarko's focus on operational improvement, cost control and finding large oil & gas projects in the U.S. and overseas. The stock has risen more than 160% since mid-2010, to its current level of about $94 per share. After announcing strong second quarterlty results, Anadarko doubled its common stock dividend.
But Holly expressed concern that the good news coming out of the Wattenberg could be wiped out if Colorado voters support anti-hydraulic fracturing initiatives in November. "We are very concerned about anti-fracking sentiment in Colorado," he told the conference. "Across the state, there are five local ballot initiatives to limit or prohibit hydraulic fracturing. This will be a huge issue locally in 2013, and next year it could become a statewide issue."
"We expect these initiatives will get a lot of press as we get closer to November," he continued. Coloradans enjoy energy costs that are 25% below the national average in large part because of the success of hydraulic fracturing, Holly added. The Anadarko executive said the oil & gas industry employs more than 100,000 Coloradans, whose livelihoods could be threatened by ballot initiatives that clamp down on hydraulic fracturing.
"We know we have the science firmly on our side," Holly said. "Hydraulic fracturing has been used for decades. It can be done safely and in a way that protects the environment. We have been actively engaged in outreach on these issues in communities where we operate, and we need to continue working to get that message out."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
