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Vol. 10, No. 3 Week of January 16, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Pioneer to spend $900M-plus on capital projects in 2005

Independent plans more development and exploration wells this year, some 800, up from last year, with some 300 wells planned for Raton basin

Ray Tyson

Petroleum News Houston Correspondent

Big exploration and production independent Pioneer Natural Resources says it plans to spend between $900 million and $950 million on capital projects worldwide in 2005, with about 5 percent or roughly $47.5 million of the total earmarked for Alaska’s North Slope.

Pioneer’s 2005 budget represents a 12 percent increase over 2004 spending, and includes Rocky Mountain projects from merger partner and subsidiary Evergreen Resources.

“In 2005, we plan to step up our activity level and drill more development and exploration wells,” Tim Dove, Pioneer’s president and chief operating officer, said Jan. 11.

About 75 percent of the 2005 capital budget is directed toward development activities, including facilities, with 25 percent allocated to exploration, Pioneer said.

Most of this year’s capital spending will occur in the United States. In addition to the 5 percent in Alaska, about 20 percent of the budget will go to Evergreen’s Rockies assets, 25 percent to other onshore U.S. assets, and 25 percent to the Gulf of Mexico.

Pioneer said it has completed an extensive technical and economic evaluation of resource potential within its Oooguruk field discovery in the shallow waters of the Beaufort Sea off Alaska’s North Slope, and will continue with engineering and permitting activities to confirm favorable development economics at the discovery. The company said it also plans to drill three wells on other Alaska prospects during 2005. (See Petroleum News story archives at

About 25 percent of 2005 capital is designated for international projects, with approximately 15 percent allocated to Argentina and 5 percent to projects in both Africa and Canada, Pioneer said.

Pioneer plans to drill about 800 wells worldwide during 2005, a significant increase over 2004, to take advantage of today’s high commodity price environment, the company said.

In Colorado’s Raton basin, Pioneer plans to drill about 300 wells, up roughly 50 percent from 2004 activity levels. To handle the stepped-up drilling schedule and deliver on the expected double-digit production growth, Pioneer said it added staff, purchased additional fracture stimulation and drilling equipment and secured additional pipeline capacity.

Pioneer’s recent Rockies acquisition also added significant acreage in the Piceance and Uinta basins, and the company said it expects to complete a comprehensive evaluation of those resources and gas marketing alternatives for the assets during 2005.

Other onshore U.S. drilling will include about 260 development wells, primarily concentrated in the company’s legacy Spraberry, Pawnee and West Panhandle fields where Pioneer has a multi-year inventory of development drilling locations.

Varied Gulf work planned

In the Gulf of Mexico, Pioneer said it plans to invest roughly $100 million on appraisal wells related to field discoveries that are expected to add new production in 2006 and 2007 and sidetracks expected to capture additional reserves and extend the production life of key wells in the Canyon Express and Falcon areas.

Additionally in the Gulf of Mexico, Pioneer said it intends to drill six to eight exploration wells focused mainly in the deepwater. The program is balanced between Falcon satellites and shallow-water prospects with shorter lead times to first production and higher-potential targets in deeper water, the company added.

In Canada, Pioneer said it will concentrate its winter drilling activities in the Chinchaga field of northeastern British Columbia with more than 50 wells planned, a 40 percent increase over 2004. In southern Alberta, where drilling is not limited to the winter season, Pioneer said it would drill as many as 80 wells targeting coalbed methane in the Horseshoe Canyon area.

In Argentina, Pioneer said it would expand its gas processing facilities to extract additional liquids. In the Neuquen Basin, more than 90 development wells are planned, and the company said it will continue to evaluate the potential for deeper gas accumulations expecting to deliver 8 to 10 percent production growth in 2005.

In North Africa, Pioneer has five wells currently producing in excess of 13,000 barrels of oil per day on the Adam concession, and plans to add production in 2005, drilling two to four additional wells. Outside the Adam concession, the company plans to drill three exploration wells, two of which will test the lateral extent of previous discoveries on the Anaguid block.

In West Africa, Pioneer said it expects to participate in two to three “high-impact” wells, one of which would be drilled on its current acreage in Equatorial Guinea.

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