Hilcorp, LOGOS, DJR and Enduring Resources outline plans for the future
FARMINGTON — In the last decade, large oil and gas companies have moved out of the San Juan Basin and been replaced by smaller, more focused producers.
Four of these newer companies presented their plans for the future during the San Juan Basin Energy Conference this week at the Henderson Fine Arts Center of San Juan College.
Hilcorp emphasizes new markets
Brian Wilbanks, Hilcorp's Energy Company's senior vice president of exploration and production for the Lower 48 West region said there are three things that have to happen to make the San Juan Basin great again.
The first thing is new companies — like the smaller, more focused operators that have entered the basin in the past few years.
"You've got to have people here that are laser-focused where when they wake up they're thinking about this basin, not about something over in West Africa," he said. "We've got that. Every major operator has changed in two years."
He said the second thing that needs to happen is finding new markets for natural gas. "If we do not, selling gas for $1.52 (per thousand cubic feet) is not going to facilitate future development."
Wilbanks said Hilcorp has sold natural gas at prices so low recently that they could not cover the costs of transporting, processing, storing and marketing.
"If we don't find new markets, the other basins are going to take over," he said.
Wilbanks said new markets could come from industrial processes in New Mexico or through exporting natural gas to other regions.
The third thing that has to happen is policy, he said.
"We have got to have fair policy in place," Wilbanks said. "We have got to have the rules of the game set where everybody knows the rules of the game so we can go out and invest and make things great again."
Hilcorp acquired assets from ConocoPhillips and XTO Energy Inc. in 2017. Wilbanks said the company is committed to the long-term success of the San Juan Basin.
“We’re here to reinvest,” Wilbanks “We’re here to turn the curve in the other direction.”
DJR Energy returns wells to production
DJR Energy started in the DJ Basin of Colorado in 2004 and has since moved to the San Juan Basin after evaluating the geology of the Gallup formation. The San Juan Basin is the only place that DJR currently operates, and the company plans to start drilling this summer.
DJR Vice President of Production Operations Jerry Austin said the company acquired Elm Ridge assets south of Farmington and north of Cuba in 2017. It also acquired 96 horizontal wells from Encana in December.
In the past two years, DJR has returned 300 wells to production and restored six large facilities.
While developing these resources, Austin said DJR will work to minimize trucking and lower emissions. One way it will minimize trucking is including four pipelines in the same ditch to transport gas, oil, water and other fluids. Austin said DJR will have larger pads with less equipment in the future.
“Technology is going to be key to what we do,” he said. "We're going to start with good geology. It's going to take good engineering. Most of all, it's going to take some great people and great teamwork."
LOGOS CEO optimistic about the future of the San Juan Basin
LOGOS traces its roots to the San Juan Basin and is solely focused on the basin, CEO Jay Paul McWilliams said. The company bought Energen assets in 2016 after selling most of its former assets in 2014.
McWilliams said the San Juan Basin has lagged in technology and LOGOS plans to bring technology that is working in other basins to the basin.
"What we can do is steal better practices from other basins," he said.
He said right now is a down period for the basin, which he attributed to the low commodity price. McWilliams said the basin also has a lot of marginal, or low-producing, wells that do not make money.
“We’re not necessarily even making enough money to pay our gathering fees,” he said.
Another challenge McWilliams addressed was regulations. A recent court decision ruled that climate change must be evaluated prior to developing a lease. McWilliams said LOGOS had some leases suspended because climate change was not part of the environmental impact analysis. He said that caused LOGOS to be less aggressive in bidding for new leases.
Despite these challenges, McWilliams remains optimistic.
“I think San Juan Basin will ultimately come back to us,” he said.
Enduring Resources plans to drill 16 to 20 wells
Enduring Resources has 1,000 operating wells and 3,000 non-operating wells in the basin. It drilled a handful of rigs last year and plans to drill between 16 and 20 wells this year. Enduring purchased WPX assets in 2018.
During a panel discussion, Enduring Resources Vice President of Land Alex Campbell emphasized the need to educate the public about the oil and gas industry.
"We are under a microscope significantly in the state and certainly in Colorado," Campbell said during panel discussions.
When asked about recent court ruling that requires climate change to be evaluated prior to developing oil and gas leases, Campbell once again stressed education of the public and being aware of what is going on at the federal and state levels.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at firstname.lastname@example.org.