Chevron bets U.S. will come through financial crisis needing energy

Implications: The Oil & Gas Journal reported in the September 15 issue that Chevron has begun natural gas production from its $7.3 billion project in Garfield County, Colorado. Gas is produced from the Williams formation of the Cretaceous. On August 25, the company began running 5 million cubic feet/day through a 30 inch pipeline. Eighty-two wells have been drilled with two rigs. Eventually from 2,000 to 3,000 gas condensate wells will be drilled and completed. Chevron has a 100% working interest. Capacity of processing facilities is now 50 million cubic feet day but this will increase to 450-500 million over the years. Development began in 2007. Up to 22 extended reach wells can be drilled from a single location. In late 2007, the company signed a long-term contract with enterprise Gas Processing to gather and treat the gas at its Rio Blanco County plant. Extracted liquids go to the Mid-America pipeline while condensate is trucked to Rangely to enter the company’s pipeline to Salt Lake City.

Analysis:  It is reassuring to observe that oil and gas companies have the financial wherewithal to conduct operations as usual in uncertain times. And that is also why it is distressing when tin-horn politicians attack them for narrow motives. High oil and natural gas prices are causing a quiet revolution in the domestic oil and gas industry. The companies are spending money at home to find and produce oil and gas that does not have a foreign price tag. That in contrast to the large financial firms that go hat-in-hand looking for prop-up funds in Asia and the Middle East. One part of the U.S. business scene is working just fine, creating jobs, providing wealth to royalty holders (including the U.S. Government) and contributing generally to what little prosperity still exists. Development and redevelopment activity now extends across the nation from the San Joaquin Valley in California to the Marcellus shale in Appalachia and from the Permian basin in West Texas to the Bakken play in North Dakota. The current nationwide boom has caused the rig count to go up, increased the demand for steel products, production services and construction of new processing facilities. It is a fond dream but perhaps the politicians will concentrate on curing the financial ills that beset the economy and let the oil and gas industry operate without relentless persecution.