Rig count to temporarily dip

by Derek Farr

Virtually all gas operators on the Pinedale Anticline Project Area (PAPA) anticipate a drill rig reduction in 2009.

That information was part of a three-day meeting at the Bureau of Land Management’s (BLM) Pinedale Field Office Tuesday where PAPA operators, regulators, environmental groups and contractors gathered for the first annual planning meeting for the PAPA Supplemental Environmental Impact Statement (SEIS) Record of Decision (ROD).

Merry Gamper of the BLM said her agency counts 26 drill rigs in the Anticline. That number is lower from the steady rate of 29 rigs last year at this time. She linked the drop directly to the economy.

“This is the first time we’ve seen these economic conditions,” Gamper said.

According to Gamper, the BLM is expecting a further reduction to 21 rigs this year.

Most of the operators echoed the BLM’s projections.

A Shell representative reported his company has dropped two rigs, from eight to six. And if the economic conditions stay the same, the operator will review whether to drop an additional rig in the middle of March.

Shell’s slowdown may be temporary. The company intends to ramp up its operation to nine rigs by 2011.

Brad Johnson of Ultra Resources said his company plans to reduce rigs from 11 current rigs to seven by the end of 2009.

Much like Shell, Ultra’s planned slowdown appears to be short-lived. Johnson reported his company will eventually operate a 16-rig fleet.

Questar didn’t report a drop in rigs, but it too had plans to expand its fleet in the future. It reported nine rigs with 11 expected in 2009. That number is expected to peak with 13 rigs anticipated for the remainder of the drilling phase.

The smaller operators reported greater activity in the future as well.

A Yates Petroleum representative said it is still in the exploratory phase and “trying to establish the reservoir.” He reported the company drilled one well in the PAPA in 2008 and it expects to drill one well this year. For the long term, the company expects to drill two wells per year for the remainder of the drilling phase.

Anschutz Corp was virtually the same. It drilled one PAPA well in 2008. It expects to drill 12 wells in 2009 and thereafter increase to three rigs drilling 18 wells a year for the next 10 years.

A NewField representative said his company does not plan on drilling a well in 2009. Instead its rig program is scheduled to commence in 2010 with three wells. By 2015, NewField intends to drill 45 wells.

Gas prices have fallen by two-thirds as energy markets succumb to reduced demand created by the worldwide recession.