A Huge Gas Well Discovered by Oil Giant BP in New Mexico

The London-based oil giant BP made an announcement In the first week of August 2017 that it has started the commercial production of gas from a gas well called as NEBU 602 Com 1H, in New Mexico’s Mancos shale, near Colorado border in San Juan basin.

This well was drilled with a 10,000-foot lateral in the Northeast Blanco Unit (“NEBU”) area. It is a section of federal lands in San Juan and Rio Arriba counties of New Mexico.  BP has the presence here since the year 1920.

In its first month of the operation, the average production hit 12.9 million cubic feet per day, which is the highest production from any well in San Juan basin in last 14 years. This well can turnout to be an important source of U.S. natural gas supply. With this kind of very high production at the initial stage, it is expected that there is a  potential for the Mancos Shale area to be a major gas play in the United States. The company has also declared that it will be drilling more wells in this area in this year itself.

In the year 2015, BP started operating its U.S. Lower 48 business as the separate business, under its own governance and systems. Since that time, the business has achieved a lot of financial and operational improvements, mainly due to the use of innovative drilling and completions techniques and effective application of data analytics. BP will be shifting its headquarters for its Lower 48 division from Houston to Denver in 2018 to have a better governance on the newly found gas in San Juan basin.

There are few issues about the gas well costs in the Mancos Shale.  The initial drilling costs are substantially higher versus other basins as drillers here have to deal with more difficult rock formations and have to bore deeper as than the other basins.  A typical Mancos well test costs around $13 million to $15 million, whereas the wells in Texas’s Permian Basin cost $8 million to $10 million and those in the Marcellus formation in the eastern region of the U.S. range from $5.5 million to $7 million.

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