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Colorado oil producers may need weeks to determine impact of flood

BY EDWARD KLUMP

DENVER (Bloomberg) -- Colorado producers, including Anadarko Petroleum Corp. and Noble Energy Inc., may take weeks to tally the damage from a flood that shut down an estimated 12 percent of the state’s daily oil production.

State workers were being “hampered by wet and slow-going conditions” as they evaluated wells and tank batteries, the Colorado Oil and Gas Conservation Commission said in an e-mail. Companies are expected to estimate costs related to any spills and timing for a return to normal drilling and production in the next few weeks, said Rob Cordray, an analyst with Guggenheim Securities LLC in Dallas.

“We still have areas that are inaccessible for repairs, and so it’ll be at least another week before we can start putting together estimates of either damage or recovery times,” Tisha Schuller, chief executive officer of the trade group Colorado Oil & Gas Association in Denver, said in a phone interview.

About 1,300 wells are shut because of flooding, down from 1,900, according to the Colorado Oil & Gas Association. The group estimates about 12 percent of the state’s daily oil output was shut at its peak this month. Officials also are tracking 11 oil spills that total more than 822 barrels, which is approaching the equivalent of three 300-barrel storage tanks, the state commission said in an e-mail.

Colorado, which saw daily oil output rise 26 percent last year, is known in part for the Wattenberg field, where Anadarko and Noble have operations.

Anadarko, based in The Woodlands, Texas, has more than 600 Wattenberg wells shut in Colorado because of flooding, John Christiansen, a company spokesman, said in a phone interview. The company hasn’t said how much production has been affected, and it hasn’t provided a timetable for having wells back online. Anadarko has about 5,800 wells in the Wattenberg, Christiansen said.

Colorado flooding may mean third-quarter sales volumes at Anadarko fall within or at the low end of the company’s expected range, said James Sullivan, an analyst at Alembic Global Advisors in New York. Volumes in the fourth quarter also may be affected, said Sullivan, who has a rating equivalent to a buy on Anadarko shares and owns none.

The vast majority of Anadarko’s facilities in the region are intact, the company said in a Sept. 23 statement on its website. There were no environmental effects related to its drilling or hydraulic fracturing work, the company said.

Noble, based in Houston, said in a statement that it had put about 325 wells back online and that it had 433 wells that remain shut. Encana Corp., a Calgary-based producer, had 77 wells offline as of Sept. 23 of the 397 it shut earlier this month, said Doug Hock, a spokesman.

The industry’s focus is on being a part of communities’ recoveries, the oil and gas association’s Schuller said. “Relatively speaking, we came out in great shape,” she said.

09/26/2013

 

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