FARMINGTON — BP America Production Company is placing its San Juan Basin South assets up for sale, which puts at least 120 jobs at risk.
The assets include about 2,200 operated and 4,400 non-operated natural gas wells throughout nearly 2,500 square miles in the southern San Juan Basin, and its interest in the ConocoPhillips San Juan gas plant.
Brett Clanton, a BP spokesman, confirmed the sale in an email sent to The Daily Times on Friday. The company will market the sale through a competitive bid process.
"BP has decided to market for sale its San Juan South operations based out of Farmington, as well as our non-operated interest (50 percent) in the ConocoPhillips San Juan gas plant," Clanton said. "While BP will continue to maintain sizeable operations in the San Juan Basin, this part of the field is mature and better-suited for a company that specializes in late-life basin operations. This decision is consistent with BP's strategy to actively manage its portfolio of assets, with a focus on value over volume ... and divesting those worth more to others."
The wells in the sale can generate as much as 28 MBOED, or thousand barrels oil equivalent per day, Clanton said. He would not offer a dollar value on the assets.
"We are marketing for sale all currently producing horizons (geologic layers) of our 2,200 operated wells," Clanton added.
Oilman Tom Dugan, owner of Dugan Production Corp., which has been operating in the area for 55 years, said he was intrigued by the sale, but not enough to commit yet as a potential buyer. His company specializes in the purchase of depleted wells like those in the BP offer.
"Two thousand or so wells, even if they are not too good, if you're getting all rights, they're worth a lot of money," Dugan said. "I'm certainly interested (in the assets). Hopefully they'll break it down in blocks. I can't believe them doing this. They're a big company. They don't screw around. We'll sure as hell look at it."
News of the sale follows the announcement on Wednesday of the naming of David Lawler as chief executive officer of BP's US Lower 48 Onshore business.
Jason Sandel, vice president of Aztec Well Companies, said rumors of the potential sale have been floating around for some time.
"With the hiring of their new CEO for the lower 48 assets, I guess this reflects a new direction," Sandel said. "It's not a leaving of the basin en masse, just a changing of the guard."
Sandel praised BP as a critical player in the development of the San Juan Basin.
"BP has been a strong community partner in this area and there's an opportunity that comes along with this and I think we need to be focused as a community and be grateful for what BP has done for this area," Sandel said. "They've invested hundreds of millions. That's nothing to shake a stick at. We should be grateful for the investment they have made."
Despite the sale announcement, Sandel expressed his continued confidence in the basin as the site for a future boom in drilling production in the near future.
"We've got eight or 10 drilling rigs working today (in the basin) where a year ago we had two or three. That's hundreds of jobs that are brought to this community that were farmed out or elsewhere before," Sandel said. "I'm very optimistic about San Juan and the Mancos (shale) play. I look for 2015 to be a year of regeneration and reinvigoration of the area."
But oil and gas workers may not be as optimistic about the news.
The workforce implications of the potential sale will mean a loss of jobs. The BP's Farmington operations center employs around 120 workers in the field whose jobs will be impacted when a sale is made.
"Future staffing levels will depend on the needs of the buyer." Clanton said.