“The fundamentals of supply and demand on oil and gas are strengthening and we think that this year is going to be much better than 2016, and then looking out even further, a lot of good things are going on.” That’s the outlook for future gas production from Jud Walker, president and CEO of EnerVest Operating.
EnerVest is a Houston-based energy firm that is ranked among the nation’s top 25 independent producers of oil and natural gas, and could actually be the largest by well count. It operates about 35,000 wells in 15 states with natural gas accounting for 70 percent of the company’s total production.
The firm acquired gas and oil wells and other production facilities in the West Tavaputs field from the Bill Barrett Corporation in August 2013 in a $371 million transaction. The properties include 338 wells and 100 miles of gathering pipelines in an area that covers 32,000 acres in Carbon, Duchesne and Uintah counties. Current daily production is about 40 million cubic feet of gas per day. Walker said the company has the capacity to produce three to four times that much.
Tax contributions
In a telephone interview with the Sun Advocate, Walker noted the company’s contribution to the economy. He said, “Since 2014 the properties have produced almost $23 million in federal royalties that go into the Reclamation Fund and the Land and Conservation Fund, and over $4 million in severance tax that has gone into the state’s general fund.” And County Clerk/Auditor Seth Oveson reports EnerVest Operating paid $959,629.48 in Carbon County property taxes in 2016.
Walker said the current oversupply of natural gas is partially due to the rapid advancement in technology and the ability to get gas out of the ground. Referring to fracking, Walker observed, “The shale resolution to some extent surprised all of us, and by doing that, the unit price dropped and supply really expanded much more rapidly than we could have ever imagined. And I think the markets are smart and everything is going to come back into balance.”
Walker believes the swing between supply and demand won’t be as wide in the future. “Hopefully we can moderate it a little bit better, and I do think there’s a sweet spot with pricing that’s good for the consumer and good for the industry and hopefully, we can strike that balance.” The company expects the price to remain steady at around $3 per thousand cubic feet in the near term. “That’s fine,” he said. “We can certainly make money and have a healthy business at $3 gas. But I think further out we’re much more bullish on gas prices as we start to export more gas, and LNG (liquid natural gas) comes on line.”
Walker praised the Bill Barrett Corporation for its careful development of the area due to environmental and archaeological concerns. He said, “I have to say Bill Barrett did an excellent job of laying the groundwork, of the development of the properties. He noted the area is governed by a Record of Decision that was based on an Environmental Impact Statement in 2010. “There are very clear stipulations on how to operate in an efficient manner out here, and we very much abide by those rules,” he said. “We are privileged to operate here and we take it very seriously. We want to preserve all the natural beauty and all the history of the area as well.”