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WPX to Power Up San Juan Drilling Ops Using LNG

WPX Energy Inc. has inked an agreement with Prometheus Energy Group Inc. to power San Juan Basin drilling rigs with liquefied natural gas (LNG).

Prometheus, based in Houston, would supply WPX operations in the San Juan through onsite mobile LNG storage and vaporization equipment. The agreement may be extended to WPX's Piceance Basin operations. The Tulsa operator, which develops and operates properties in North Dakota, New Mexico and Colorado, has used field gas for its drilling work over the past two years but in some acreage, field gas is unavailable.

Even with a 50-50 split alternating between field gas and LNG, "the overall natural gas solution is significantly below diesel costs, even at currently depressed prices for distillate fuel," the management teams said. The venture, for an undisclosed amount, was announced on Monday and is the first between the companies.

Prometheus has been developing LNG fueling for natural gas rigs and hydraulic fracturing operations since 2010. Management said over the past five years it has supplied LNG fuel for 40 rigs and helped drill more than 1,200 wells. The company also has supplied several dual fuel fracture spreads in the oilfield sector.

"At the time of commissioning of WPX, our delivered volume of LNG exceeded 100 million gallons, all within the last four years," said Prometheus CEO Jim Aivalis.

Prometheus today is privately held by Royal Dutch Shell plc's Shell Technology Ventures Fund 1 BV and private funds managed by Black River Asset Management LLC, a subsidiary of Cargill (see Daily GPIApril 30, 2012).

WPX's Justin Stolworthy, who is drilling engineer team leader of the San Juan Basin, said Prometheus management's "long track record in the LNG fueling space really demonstrated that LNG solutions are safe, economical and reliable. They met our high expectations from the outset."

In late 2013, Apache Corp. contracted with Prometheus to use LNG for some of its drilling rigs and hydraulic fracturing services (see Shale DailyDec. 9, 2013). Prometheus also clinched a multi-year agreement two years ago to supply Antero Resources Corp. with LNG to power drilling rigs in the Marcellus and Utica shales (see Shale Daily, Aug. 20, 2013). In 2012, it obtained an agreement with Seneca Resources Corp., the exploration arm of National Fuel Gas Co., to supply LNG for its drilling operations in Appalachia (see Shale DailyOct. 29, 2012).

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