Updated by Ann Rascalli

Williams to Expand Piceance Basin Drilling

Despite the  continuing slump in natural gas prices, the state’s largest producer of the commodity says it is planning to expand its Western Slope operations in 2010. Tulsa, Okla.-based Williams plans to increase the number of rigs operating in the Piceance Basin from eight to 12, according to company executives.

According to company spokesperson, Donna Gray, the expansion will start in January when the company installs a drilling rig at its newly acquired Piceance Valley field south of Newcastle. All told, three rigs will be added to Williams’ Highlands field on the Roan Plateau, company executives said.

“A lot of our growth next year will be in the valley and in the Highlands,” Steve Malcolm, Williams’ chief executive, told analysts in a third-quarter conference call.

Earlier this year, Williams bought a 2,200-acre lease, on private and state land near Newcastle, from Orion Energy for $252 million. Currently, there is one rig and 32 producing wells on the Highlands field. Ms. Gray says her company plans to drill roughly 300 wells on the Western Slope, matching the total for 2009.

The prolific Piceance Basin in northwest Colorado represents nearly 70% of Williams’ total proven reserves of 4.5 trillion cubic feet of natural gas.

The economic recession and low NG prices have reduced drilling activity in many parts of the country. However, according to comments from Malcolm during the conference call to investors, the Piceance Basin area has benefited from increased drilling efficiencies and the ability, because of the recession, to renegotiate vendor contracts, which cut costs for supplies and equipment by as much as 30 percent.

COGCC’s Neslin Says Battlement Mesa Drilling Health Study Not Pressing

From reports by David O. Williams

The head of the state agency that oversees oil and gas drilling in Colorado says it’s too early to commit to a baseline health study in a Western Slope community wary of plans to site up to 200 natural gas wells near homes and on its municipal golf course.

Members of Battlement Concerned Citizens (BCC) want a Health Impact Assessment conducted before state or local approval of an Antero Resources plan to put 10 well pads and up to 200 gas wells in the Garfield County community of Battlement Mesa, home to more than 5,000 people.

“It’s still, from our standpoint, very early in the process,” said Colorado Oil and Gas Conservation Commission (COGCC) executive director David Neslin. “The process actually hasn’t even begun for us to be involved in authorizing drilling on Battlement Mesa.

“Antero has indicated it will develop a Comprehensive Drilling Plan under the [state’s] amended [drilling] rules. The amended rules set forth a process by which that will occur, which will provide lots of opportunities for the county and local citizens to be involved and for us to consult with the health department about any health-related concerns or issues, but that process hasn’t begun yet.”

Antero officials have indicated they hope to apply for both state approval from the COGCC and county approval via a Major Land Use Impact Review by the end of the year. Garfield County environmental health manager Jim Rada has said he’ll brief county commissioners on applying for a Health Impact Assessment (HIA) grant in the next few weeks. Rada has also talked to the state about a grant for the studies offered by two nonprofit groups.

“I can say that I am aware of the request,” Neslin said in an interview. “I’ve discussed it briefly with Jim Rada of Garfield County. We will certainly consider his request, and we will need to look into what it would involve and what information it would provide.”

Still No Agreement on Roan Gas Development

A second court-ordered settlement conference aimed at resolving litigation over oil and gas development on the Roan Plateau near Rifle has failed to produce an agreement. Litigants in the case held another round of court-ordered talks on Nov. 20 after negotiations two weeks earlier failed to produce a settlement.

Another meeting is planned prior to January 15.

Court documents reveal the conference partially addressed the idea of phasing in energy leasing on the plateau top. Gov. Ritter advocated such an approach, contending that it would have better protect the environment and resulted in more revenues to the state. As we’ve reported in Colorado Energy News, the federal agency decided against Ritter’s proposal of phasing the oil and gas leasing on the Roan, instead deciding to lease the entire plateau immediately. The caveat being that actual drilling be carried out in phases to minimize the impacts at any one time.

The 2008 lawsuit brought by the Colorado Environmental Coalition challenges the BLM’s leasing of 55,000 acres on and surrounding the Roan Plateau northwest of Rifle.

Mike Freeman, an attorney with EarthJustice, the organization representing the plaintiff, told reporters he and other attorneys are not permitted to discuss the particulars of the settlement discussions. A look at a court filing shows a magistrate had ordered parties to submit pre meeting confidential settlement statements “addressing their positions regarding use of roads on top of the Plateau and phased development/phased leasing.”