BP Strikes Major Gas Deposit In New Mexico

BP has announced a potentially huge gas discovery in the Mancos Shale in New Mexico. The NEBU 602 Com 1H well, the company said, yielded an average 12.9 million cu ft of natural gas daily over a 30-day period, which is the highest production rate for the San Juan Basin, where the well is located, for the last 14 years.

BP bought the Mancos Shale acreage from Devon Energy in late 2015. The assets include 480 wells on 33,000 acres. At the time, the British supermajor had 550,000 acres and produced 100,000 barrels of oil equivalent daily in the San Juan Basin.

Following the NEBU 602 Com 1H news, the chief executive of BP’s Lower 48 operations, Dave Lawler, said that the company believes the Mancos Shale could turn into an important new source of natural gas for the U.S. and that BP will expand its exploration activities there.

BP reported underlying profit on a replacement cost basis of US$684 million for the second quarter of the year, down from US$1.5 billion for the first quarter. On an annual basis, however, the underlying RC result was only slightly lower than the US$720 million booked for April-June 2016.

Net debt as of June 30, 2017, went up to US$39.8 billion, up from US$30.9 billion a year earlier. Divestments brought in US$500 million in the second quarter, up from US$400 million in Q2 2016. Operating cash flow for the three-month period came in at US$6.9 billion, up from US$5.3 billion a year earlier, excluding payments related to the 2010 Deepwater Horizon explosion in the Gulf of Mexico. 

The company said in late June that it had made four major gas discoveries since January, with combined estimated reserves of over 17 trillion cu ft. Gas exploration has become a more prominent part of the company’s business strategy as it looks to shift away from oil and into gas, in a bid to take advantage of the rising demand for what many call a bridge fuel between fossil fuels and renewables.

By Irina Slav for Oilprice.com

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