Ursa puts off drilling in Battlement Mesa till 2017

Map of the two well pads in “Phase 1” of Ursa’s proposal to develop minerals under Battlement Mesa. The closest residence is within 579 feet.

Map of the B and D pads in “Phase 1” of Ursa’s plan to drill under Battlement Mesa. The closest residence is within 579 feet.

Dave Devanney reported that Ursa has informed Battlement Concerned Citizens that they plan to begin their operations in the second quarter of 2017. Previously Rob Bleil, regulatory and environmental manager for Ursa, had stated that construction on the well pads would likely start in July or August 2016. This welcome delay gives Battlement Mesa more time to prepare.

In December, when the Garfield County planning commission and the BOCC approved three special use permits to drill 53 wells on 2 pads plus 2.5 miles of pipeline inside the Battlement Mesa PUD, each permit included several conditions of approval which are now available to the public and you can access them right here.

Battlement Mesa PUD – B Well Pad Conditions of Approval

Battlement Mesa PUD – D Well Pad Conditions of Approval

Pipeline Conditions of Approval

With the steady decline in the oil and gas markets, the slowdown in the gas fields is evident. Last October Ursa outlined their drilling plans near Silt: “The six-month operational forecast is to drill an additional 6-8 wells on the Valley Farms L pad, with commencement to occur either by mid-November 2015 or Q1 2016.” As of this week anyway, there is no drill rig on the L pad, and no drill rigs in sight around Silt — or Rifle. We’re all watching and waiting to see what happens.

In the meantime, this is recent article by Michael Klare is a comprehensive analysis of the global energy markets and the impact on domestic production. It’s well worth reading if you plan to hang around planet Earth for a few more years.

The Oil Pricequake: Political Turmoil in a Time of Low Energy Prices [scroll down the page]
By Michael T. Klare

As 2015 drew to a close, many in the global energy industry were praying that the price of oil would bounce back from the abyss, restoring the petroleum-centric world of the past half-century. All evidence, however, points to a continuing depression in oil prices in 2016 — one that may, in fact, stretch into the 2020s and beyond. Given the centrality of oil (and oil revenues) in the global power equation, this is bound to translate into a profound shakeup in the political order, with petroleum-producing states from Saudi Arabia to Russia losing both prominence and geopolitical clout.

To put things in perspective, it was not so long ago — in June 2014, to be exact — that Brent crude, the global benchmark for oil, was selling at $115 per barrel. Energy analysts then generally assumed that the price of oil would remain well over $100 deep into the future, and might gradually rise to even more stratospheric levels. Such predictions inspired the giant energy companies to invest hundreds of billions of dollars in what were then termed “unconventional” reserves: Arctic oil, Canadian tar sands, deep offshore reserves, and dense shale formations. It seemed obvious then that whatever the problems with, and the cost of extracting, such energy reserves, sooner or later handsome profits would be made. It mattered little that the cost of exploiting such reserves might reach $50 or more a barrel.

As of this moment, however, Brent crude is selling at $33 per barrel, one-third of its price 18 months ago and way below the break-even price for most unconventional “tough oil” endeavors. Worse yet, in one scenario recently offered by the International Energy Agency (IEA), prices might not again reach the $50 to $60 range until the 2020s, or make it back to $85 until 2040. Think of this as the energy equivalent of a monster earthquake — a pricequake — that will doom not just many “tough oil” projects now underway but some of the over-extended companies (and governments) that own them …

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2 Comments on “Ursa puts off drilling in Battlement Mesa till 2017”

  1. Fiona Lloyd Says:

    Oil hit $28 this morning. Canada is facing setting negative interest rates today to keep their economy afloat. I’d be amazed if URSA were able to avoid bankruptcy over the next 6 months.

  2. Peggy Tibbetts Says:

    I think they’d sell their assets first. But here’s the latest on local drilling from the Daily Sentinel —

    Garfield drilling lowest since ‘09
    Mesa County rises in rank after burst of production

    … Don Simpson, an Ursa vice president, said that with prices so low, “right now we’re just trying to pick our most profitable locations and drill them first.”

    Some wells are productive and economical to drill even now for Ursa, meaning that the company is making plans on where to drill next locally rather than whether to stop, he said.

    “There are some places that work for us,” he said.

    One key is to cut costs when prices are so low, he said. When prices are low, drilling, well-completion and other costs also can drop because contractors often agree to pay less in order to compete for the smaller amount of available business.

    Simpson said he’s seen other challenging price environments for the oil and gas industry, going back as far as the 1980s.

    “This is certainly a tough one. Very, very tough,” he said …

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