Thursday, March 31, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith
Devon Energy, the largest producer in North Texas' Barnett Shale, has lots of drilling ahead of it in the big natural gas play, Executive Chairman Larry Nichols told the Star-Telegram in a telephone interview.
"We have at least 7,500 undrilled locations," said Nichols, who last year gave up his CEO title after 30 years in the job. Devon plans to keep about a dozen drilling rigs busy in the Barnett this year and will drill perhaps 325 wells, he said.
The Oklahoma City-based company has an office in downtown Fort Worth and 550 employees involved in Barnett Shale operations.
Devon's net Barnett production peaked at the equivalent of 1.2 billion cubic feet of natural gas per day in the fourth quarter last year. As a result of weak gas prices and limited demand, the company will probably maintain production at about that level this year, but it has the capability to increase output to at least 1.5 billion cubic feet Nichols said.
While current natural gas prices of slightly more than $4 per million British thermal units are not sufficiently high for sustaining production levels for "dry gas," it can be sufficient for "wet gas" production, which includes natural gas liquids that generate additional revenue, Nichols said. Devon's Barnett production is a mix of dry and wet gas, he said.
A geologist and lawyer by training, Nichols said he expects continued technological advances in drilling and completion of wells that will result in greater recovery of oil and natural gas.
As an example, he cited major technological advances in horizontal drilling and hydraulic fracturing that -- along with higher oil prices -- have revived activity in West Texas' heavily drilled Permian Basin.
Devon currently has 17 drilling rigs running in the Permian, where the company has about one million acres under lease, Nichols said.
He said he's "very excited" about the company's new 50-story corporate headquarters under construction in Oklahoma City. It will allow the company to consolidate its approximately 1,700 workers in Oklahoma City into a single building. They presently are scattered among five buildings, he said.
All the Devon employees are expected to be in the new building by the end of 2012.
"We have at least 7,500 undrilled locations," said Nichols, who last year gave up his CEO title after 30 years in the job. Devon plans to keep about a dozen drilling rigs busy in the Barnett this year and will drill perhaps 325 wells, he said.
The Oklahoma City-based company has an office in downtown Fort Worth and 550 employees involved in Barnett Shale operations.
Devon's net Barnett production peaked at the equivalent of 1.2 billion cubic feet of natural gas per day in the fourth quarter last year. As a result of weak gas prices and limited demand, the company will probably maintain production at about that level this year, but it has the capability to increase output to at least 1.5 billion cubic feet Nichols said.
While current natural gas prices of slightly more than $4 per million British thermal units are not sufficiently high for sustaining production levels for "dry gas," it can be sufficient for "wet gas" production, which includes natural gas liquids that generate additional revenue, Nichols said. Devon's Barnett production is a mix of dry and wet gas, he said.
A geologist and lawyer by training, Nichols said he expects continued technological advances in drilling and completion of wells that will result in greater recovery of oil and natural gas.
As an example, he cited major technological advances in horizontal drilling and hydraulic fracturing that -- along with higher oil prices -- have revived activity in West Texas' heavily drilled Permian Basin.
Devon currently has 17 drilling rigs running in the Permian, where the company has about one million acres under lease, Nichols said.
He said he's "very excited" about the company's new 50-story corporate headquarters under construction in Oklahoma City. It will allow the company to consolidate its approximately 1,700 workers in Oklahoma City into a single building. They presently are scattered among five buildings, he said.
All the Devon employees are expected to be in the new building by the end of 2012.
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