NGI The Weekly Gas Market Report
BP Amoco and Enogex Inc. announced the exchange of gas gatheringsystems in the Arkoma Basin of Oklahoma in order to capitalize ontheir producing well interests. BP Amoco received Enogex’s Red Oakgas gathering system in Latimer County in exchange for its Kintaand South Bokoshe gas gathering systems in LeFlore and Haskellcounties. No cash was involved in the deal.
“This deal enables us to benefit from lower system pressures,deferred capital expenditures and lower operating costs in one ofour core onshore producing areas,” said Anthony J. Attardo, BPAmoco Arkoma asset manager. BP Amoco net production in the ArkomaBasin totals some 115 MMcf/d.
“The assets we gained help give us a solid base of dedicatedreserves and achieve better pipeline efficiency by the integrationof systems,” said Roger A. Farrell, Enogex CEO.
Both BP Amoco and Enogex have wells where the gathering systemsare located. BP Amoco, however, had more wells in the Red Oak areathan in the areas where it gave up gathering systems. The companyhas integrated Enogex’s Red Oak gathering system with its ownexisting Red Oak gathering system to lower operating pressures andincrease production from its wells. “What we were able to dothrough the trade was kind of focus on the area where the majorityof our wells are feeding the gathering system,” Attardo said. “Thewells in this area are very sensitive to the pressure that theyseek. As we are able to lower the operating pressures we are ableto increase the volume from the wells that feed it.”
For less than $1 million, BP Amoco was able to add compressionand pipeline looping to the combined Red Oak systems. Work toconsolidate the two systems was completed about two months ago,Attardo said. The asset swap actually took place several monthsago, Attardo said.
“We have been able to see some increased production already as aresult of the work that we’ve done. It allows us to look at someadditional possibilities for growth in the future. By doing this,what we’re working on is being able to sustain our production inthe Arkoma area. We’re doing some additional drilling right now anddoing some seismic activity.”
BP Amoco is the No. 1 gas producer in the Arkoma Basin, inOklahoma and in North America. “Gas is a very important commodityfor BP Amoco and in the areas where we operate we like to be No. 1or 2.”
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