HOUSTON – Marrying rigs, pipes and processing plants doubled Anadarko Petroleum Corp. production in Colorado’s Wattenberg field, so the oil company is betting $1.5 billion it will work again in West Texas.
Anadarko’s pipeline unit Western Gas Partners last week agreed to buy Houston’s Nuevo Midstream, a firm that hauls hydrocarbons out of the Permian Basin in West Texas through hundreds of miles of pipelines and other systems – and, as fortune smiles, the infrastructure will be able to service Anadarko’s oil and gas fields there.
Ramping up its own infrastructure to take crude and natural gas out of its fields is a strategy Anadarko calls “loading the spring,” said Don Sinclair, president and CEO of Western Gas Partners, a pipeline operator subordinate to Anadarko.
When higher volumes of oil and gas can be pumped out of the wells – as they were in Anadarko’s horizontal drilling efforts in Colorado – the hydrocarbons need somewhere to go. Turning on Anadarko’s processing plant in Colorado, dubbed the Lancaster plant, allowed Anadarko to double its production levels there to 82,000 barrels of oil equivalent a day.
“You have to have midstream infrastructure in place when you’re in these plays,” Sinclair told Fuelfix in a recent interview. The Lancaster plant can process 300 million cubic feet of gas a day and send it to pipelines that reach the Gulf Coast.
In West Texas, Anadarko’s infrastructure investment comes as it expects to yield more out of multiple stacked “benches,” oil-soaked layers of earth crust, in the Wolfcamp Shale. It’s experimenting with clustering wells closer together in a bid to tap into new formations even as it is takes over construction of a new Nuevo processing plant.
“We’re doing the exact same thing with Nuevo, we’re building processing capacity,” Sinclair said. “They’re very strong wells. The plan allows us to stay in front of the curve, instead of taking an inordinate amount of risk.”
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