WPX Energy's San Juan Basin VP retires

James Fenton
WPX Energy Vice-President Ken McQueen talks on May 12 during a presentation at the Four Corners Oil and Gas Conference held at the McGee Park Convention Center in Farmington. McQueen announced that he would retire the next day.

FARMINGTON — WPX Energy San Juan Vice President Ken McQueen — after 14 years working the San Juan Basin in that role — has retired.

McQueen made the announcement during his talk earlier this month on the final day of the Four Corners Oil and Gas Conference at McGee Park.

McQueen began his final remarks as the company's San Juan Basin operations head by touting WPX's drilling accomplishments in the basin over the last decade.

"We've drilled 118 horizontal lateral (wells) down in the Lybrook area," McQueen said. "And we've acquired seven more through various acquisitions, so today we operate 125 horizontal-lateral (wells) in the Chaco area."

WPX has also drilled seven horizontal dry-gas wells in the Mancos shale play near the northern rim of Navajo Dam since 2010, McQueen said. The San Juan Basin, he said, can be broken down into three windows — from a dry gas window in the north to a wet gas interval south of it and an oil window filling in the remainder.

At center, WPX Energy Vice-President Ken McQueen talks with New Mexico Tech Associate Director, New Mexico Center for Center for Energy Policy Daniel Fine, right on May 12 during the Four Corners Oil and Gas Conference at the McGee Park Convention Center in Farmington.

Last year, the Tulsa-Okla.-based company, which also has offices in Aztec, drilled two of its longest lateral wells in its Rosa Unit near Navajo Dam.

"It's amazing how much technology has progressed in the last five years," McQueen said. "Back (in 2007), we thought a mile was quite a long reach. And we thought we had the best stimulation technology, but we really bypassed that with the work we've done (in 2015)."

WPX doubled its underground reach with horizontal drilling after the company successfully drilled a pair of two-mile horizontal wells in the Rosa Unit.

"So what's the biggest impediment to drilling?" McQueen asked the room. After some laughter, he gave the anticipated answer.

The answer was low oil and gas prices. With a thousand cubic feet of natural gas recently selling for $1.52 on the commodities market, the prohibitively low prices — which operators have not seen since the mid-1990s — make development and operations a no-go, he said.

WPX somewhat deflected the brunt of the slump of oil and gas prices by successfully hedging contracts the company established through next year, McQueen said. That means the company locked in some future sales at higher prices.

"That's helped us keep a rig in the game," he said.

McQueen said harvesting wet gas remains a complicated problem — or an opportunity for engineers to potentially solve in the future. Wet gas contains other components, such as ethane, that can be sold separately.

"From my perspective, that remains the big prize out there, If someone can figure out how to crack that nut in the Mancos in that wet-gas interval and to be able to produce that," he said. "That's really the next big prize on the horizon."

Until then, McQueen said the Lybrook area remains a "geologic sweet spot" the company will continue to pursue.

Despite the challenges, WPX maintains a sizable, but more subdued, drilling program for the remainder of the year. The company, which had — before plummeting prices — three drilling rigs working at once, is now down to one.

Jeff Kirtland, WPX spokesman, said the company is planning to spend between $75 and $90 million in the San Juan Basin and $175 to $225 million in the Permian Basin this year.

WPX Energy Vice-President Ken McQueen gives a presentation at the Four Corners Oil and Gas Conference on May 12 at the McGee Park Convention Center in Farmington. In his talk, McQueen announced that he would retire the next day.

"There are two rigs in Permian and we are adding a third the second half of (this) year," Kirtland said in an email. "There is currently one rig (drilling) in the San Juan Basin."

That rig — operated by Aztec Drilling, a subsidiary company of Aztec Well Service — is located in the Lybrook area.

McQueen praised WPX's 100 workers and the community, and said the Chaco development has been a "24-7 job for all that time."

"To the San Juan community, it's been a great 14 years," McQueen said. "You've been the best."

Chad Odegard was named WPX's new San Juan Basin vice president, according to Kirtland. Odegard previously was the Piceance Basin vice president for the company. The Piceance Basin — which contains reserves of coal, natural gas and oil shale — is in northwestern Colorado.

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.