{"id":13998,"date":"2014-11-19T23:57:22","date_gmt":"2014-11-19T23:57:22","guid":{"rendered":"http:\/\/independentweekender.com\/?p=13998"},"modified":"2014-11-19T23:57:22","modified_gmt":"2014-11-19T23:57:22","slug":"wpx-to-divest-from-marcellus-shale-as-profiting-from-gas-proving-more-difficult","status":"publish","type":"post","link":"https:\/\/www.greenstreetdata.com\/PS\/2014\/11\/19\/wpx-to-divest-from-marcellus-shale-as-profiting-from-gas-proving-more-difficult\/","title":{"rendered":"WPX to divest from Marcellus Shale as profiting from gas proving more difficult"},"content":{"rendered":"

BY BRENDAN GIBBONS<\/strong>
\n Times-Shamrock Writer<\/strong><\/p>\n

WPX Energy Inc. will divest from the Marcellus Shale with no plans to drill any new wells in Pennsylvania for the foreseeable future.<\/p>\n

The Tulsa-based company spun off from Williams Companies Inc. in 2011. Its new CEO, petroleum engineer Rick Muncrief, joined the company in May and took a hard look at WPX\u2019s assets, spokeswoman Susan Oliver said.<\/p>\n

WPX will now focus on developing its acreage in the oil and natural gas liquids fields of Colorado, North Dakota and New Mexico, she said.<\/p>\n

\u201cThe decision was made to divest of the Marcellus asset because we get a better return with drilling for oil and natural gas liquids than the dry gas here,\u201d she said. Its decision came as no surprise to Lou D\u2019Amico, president and director of the Pennsylvania Independent Oil and Gas Association.<\/p>\n

\u201cI think there are a number of companies that are looking at possibility of getting out of the dry gas portion of the Marcellus,\u201d he said. \u201cRight now with the current prices, there\u2019s not a lot to justify additional drilling in the area.\u201d<\/p>\n

The Marcellus Shale holds dry gas in Northeast Pennsylvania and the more profitable wet gas region of Southwest Pennsylvania and Northwest West Virginia.<\/p>\n

Natural gas spot prices plummeted from 2008 to 2009, according to U.S. Energy Information Administration data. Henry Hub spot prices, an industry benchmark, has hovered around $3.50 to $4.50 per thousand cubic feet for about the past five years.<\/p>\n

Companies that drill in Pennsylvania consistently sell their gas at $1.50 to $2 less than the Henry Hub price, which doesn\u2019t make a $7 million to $10 million investment per well worthwhile, Mr. D\u2019Amico said.<\/p>\n

Although WPX didn\u2019t mention the looming 5 percent severance tax proposed by Democratic Governor-elect Tom Wolf, Mr. D\u2019Amico said many association members are eyeing the tax.<\/p>\n

\u201cI\u2019m sure some of these companies are looking at a recently elected governor saying he\u2019s going to throw in a 5 percent severance tax and are saying, \u2018Enough\u2019s enough, we\u2019re going to go somewhere else,\u2019\u201d he said.<\/p>\n

To make drilling for dry gas worth the expense, gas companies are hoping for another cold winter in the short term, said Bernard Weinstein, Ph.D., economist and associate director of the Maguire Energy Institute at Southern Methodist University in Dallas, Texas.<\/p>\n

In the long run, gas-fueled power generation, vehicles and exports to other countries are necessary to bring prices back up to a level to encourage more gas development, Dr. Weinstein said.<\/p>\n

\u201cProducers would be very happy with $5 to $7 if they thought it was going to last,\u201d he said.<\/p>\n

WPX will continue to operate its producing wells, Ms. Oliver said. It has not identified a buyer for its Marcellus holdings.<\/p>\n

The company reported 162 active wells in Pennsylvania in the first half of 2014, according to state production data. Most are in Susquehanna and Westmoreland counties, with a handful in Centre and Clearfield counties.<\/p>\n

Ron Ivey, a Forest Lake Twp., Susquehanna County, resident who hosts a WPX well on his land, is hopeful for the future. About two years after it came online, his single well still produces an average of 1.4 million cubic feet per day, according to state data. The one-day output is enough to supply more than 10 homes for a year.<\/p>\n

\u201cHonestly, I see us getting sold,\u201d he said, adding that WPX placed a small compressor engine on his well pad, making it more likely his gas will reach the pipeline and the market.<\/p>\n

\u201cIt\u2019s just sitting there and it\u2019s already been repermitted again,\u201d he said. \u201cWe\u2019re just waiting.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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