In for the long haul: Williams about to drill 3,000th gas well in Piceance Basin

RBC — Williams will continue to be an active player in the Piceance Basin, but not at the same level it has been in the past few years.
“The company is in a great position, with all of its infrastructure, to produce gas in the Piceance Basin for a long time,” Susan Alvillar, a spokeswoman for the company, said last week. “We’re going to be here for a long time. We’re in it for the long haul.”
But, for now, the company is scaling back its plans for the area. The reason for the reduction in activity is due to a combination of factors, including, of course, the economy.
“Obviously, the economy is on everyone’s minds,” Alvillar said. “That downturn affects our business, just like it affects every other business.
“In part, it’s also the regulatory climate,” Alvillar said of Colorado’s new rules for regulating the oil and gas industry. “Because of the new rules and regs, that will definitely cost our company more money.”
In Rio Blanco County, Alvillar said Williams will cut back on the amount of drilling.
“Right now, we’re running two rigs in Rio Blanco County, but, probably, for the bulk of this year, we’ll probably only have one. So one (rig) will either be laid down, or we’ll move it down here to Garfield County,” said Alvillar, who works out of the company’s Parachute office. “We drilled 28 wells in Rio Blanco County (last year). This year we’re looking at about 11, at this time. We will have an active drilling program, but it will be at a reduced scale.”
There are other reasons for the company scaling back its plans.
“A lot of it has to do with the lack of manufacturing,” Alvillar said. “Manufacturing is very slow right now. A lot of our gas would go to Texas and be used in manufacturing, but that sector is really slow right now.”
The company has a new $350 million gas processing facility — the Willow Creek Gas Plant — that is under construction in the Piceance Basin. The plant is scheduled to begin operations this summer.
“We still have Willow Creek, and we plan on putting that online mid-summer sometime,” Alvillar said.
The company is waiting to “recommence” work on a $50 million pipeline that will tie Willow Creek into the Overland Pass pipeline that carries natural gas to markets in the south.
“The BLM, on certain winter ranges, has a timing stipulation where you can’t do any activity in those areas where it might stress out the big game,” Alvillar said. “That’s what we’re operating under. When those timing stipulations are lifted, we’ll recommence that construction.
Traditionally, that end date is April 30, but “that can change, depending on the weather,” Alvillar said. “But unless something changes with the BLM, that’s our plan, to recommence May 1. (The pipeline) is scheduled to be completed in time to start the plant.”
The company has made a significant financial investment in the area, and even with the economic downturn, it will continue to do so, Alvillar said, though those plans are always subject to change.
“In the past three years, in the two-county area (Rio Blanco and Garfield), we spent $3.5 billion on facilities, on plants, on pipelines, on wells,” Alvillar said.
Williams has nearly 3,000 wells in the Piceance Basin.
“We will drill our 3,000th well this year, probably sometime in the first quarter,” Alvillar said.
And the company has the potential to add another 6,000 to 9,000 wells in the region.
“So, ultimately, if every location is drilled, we could have 12,000 wells operating in northwest Colorado,” Alvillar said. “We have a great position here in the Rockies. We’ve learned a lot about the technology and how to get gas out in higher, tougher locations.”
In the long term, Williams has plans to increase its activity in Rio Blanco County.
“The real future in our operation, besides getting new leases, really the future of our business is looking more toward Rio Blanco County, at some point and time,” Alvillar said. “The future is really at the higher locations and learning how to do business year-round. We’ve made a lot of strides in how to do business in those conditions. We have a lot of experience, as well as our infrastructure under our belt, that will serve us well in the future.”