Newfield Signs Agreements for Growing Woodford Shale Play
Newfield Exploration Company reported that its wholly-owned subsidiary, Newfield Exploration Mid-Continent Inc., signed two separate agreements for firm transportation for 250,000 dekatherms per day (Dth/d) (approx. 250 MMcf/d) from its growing Woodford Shale Play, located in the Arkoma Basin of southeastern Oklahoma.
Newfield signed an agreement with Midcontinent Express Pipeline LLC (MEP) for 200,000 Dth/d (approx. 200 MMcf/d) of firm capacity on the MEP transmission system. MEP, connecting Bennington, Oklahoma, and Perryville, Louisiana, will have initial capacity of 1.4 Bcf/d. Pricing for Newfield's expected gas sales will be tied to Gulf Coast indices. Newfield's gas will be delivered to Bennington through a new 50-mile pipeline planned by MarkWest Energy Partners L.P. This line will connect MarkWest's gathering system in the Woodford Shale Play to Bennington. Midcontinent Express Pipeline is a 50/50 joint venture between Kinder Morgan Energy Partners, L.P. (KMP) and Energy Transfer Partners, L.P. KMP is managing the construction and will operate the pipeline.
Under a separate agreement, Newfield and Laclede Energy Resources, Inc. signed a five year agreement for the firm sale and purchase of 40,000 Dth/d (approx. 40 MMcf/d) in 2008 and 50,000 Dth/d (approx. 50 MMcf/d) in each of 2009 through 2012. The gas will be delivered into firm transportation on Centerpoint Energy Gas Transmission Company and is priced using a fixed differential to NYMEX.
"The Woodford Shale Play is the fastest growing component of our portfolio today," said David A. Trice, Newfield Chairman, President and CEO. "We exited 2005 with 25 MMcfe/d of gross production in the Woodford. We exited 2006 producing 85 MMcfe/d and 2007 at 165 MMcfe/d. We expect to exit 2008 with another 50% increase in rate at approximately 250 MMcfe/d. These agreements ensure that a large portion of our expected future production from the Woodford will move out of the region on firm transportation, reducing both basis risk and pricing volatility."
In September 2006, Newfield and MarkWest signed agreements providing for MarkWest to construct and operate gathering pipelines and related facilities in the Woodford Shale. Since that time, MarkWest has installed approximately 250 miles of 16-inch and 12-inch low pressure and high pressure steel pipe and more than 120 miles of 10-inch and 12-inch gathering lines. MarkWest has connected 161 wells into the system and built 6 new compressor stations with horsepower totaling 71,000.
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