With the potential of the Arkoma Basin’s Woodford Shale play just coming into focus, many in the industry are hoping for a repeat of the success seen in the Barnett Shale of North Texas. For its part, Newfield Exploration Co. thinks it’s time to start constructing pipeline to get gas to market.
Newfield and MarkWest Energy Partners LP agreed to construct and operate a gathering system for development of Newfield’s Woodford Shale play in southeastern Oklahoma’s Arkoma Basin.
MarkWest will spend $175 million by the end of 2007 and up to $350 million over the next four years to build gathering infrastructure across about 200 square miles in a four-county region. The system will fully support Newfield’s drilling over its entire Woodford Shale position. The low-pressure system will provide compression, dehydration and treating services and will include more than 400 miles of large-diameter pipe and 100,000 horsepower of compression. Takeaway capacity will exceed 500 MMcf/d. The initial agreement is for 15 years with an option to renew.
“By the end of 2009, we expect our gross Woodford Shale production to increase from a current rate of about 65 MMcfe/d to more than 350 MMcfe/d,” said Lee Boothby, president of Newfield Midcontinent. “Our growth requires the installation of significant midstream infrastructure.”
Newfield has drilled more than 100 vertical and 30 horizontal wells in its Woodford play to establish the extent of the resource. The company is adding acreage and now owns an interest of more than 350,000 gross lease acres (more than 125,000 net). Late in 2005 Newfield shifted to horizontal wells, significantly increasing initial production rates and estimated ultimate recoveries. Newfield’s most recent five wells had average initial production of 3.7 MMcfe/d, and results to date show the company’s average Woodford horizontal well will recover about 2.9 Bcfe gross.
Newfield said it expects to increase its operated rig count in the play from six currently to as many as 13 rigs by the end of the year and to as many as 20 rigs by the end of 2007. The company expects to spud about 60 horizontal wells in the Woodford this year and up to 155 in 2007.
Late last year, MarkWest, a publicly traded master limited partnership, bought El Paso’s Javelina midstream interests for $156 million (see NGI, Nov. 7, 2005). The sale included El Paso’s 40% stake in the Corpus Christi, TX-based Javelina gas processing and fractionation facility and associated gas pipelines. MarkWest also secured Kerr-McGee’s non operated stake in the Javelina plant for $156 million.
“The agreement will contribute significant long-term, fee-based growth opportunities to MarkWest from one of the premier resource plays in the U.S.,” said MarkWest CEO Frank Semple.
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