Anadarko: Permit Process May Delay Investment in Colorado

DENVER (Denver Post), Nov. 10, 2009

Anadarko Petroleum Corp. is prepared to invest $100 million in Colorado's Wattenberg oil and gas field next year -- provided the state can trim the time it takes to issue permits, Chief Executive James Hackett said.

Issuing permits is taking about 85 days, Anadarko and industry executives say. A more reasonable time frame would be 45 days to allow for more effective utilization of equipment and the ability to respond to market changes, company executives said.

"Getting access to the fields and drilling efficiently is a key," Hackett said. "We are working with the state on this issue."

Starting in April, the Colorado Oil and Gas Conservation Commission began issuing permits under new, more comprehensive regulations.

"In March, we received a surge in applications--1,500--that would be grandfathered, and we've been working to cut the backlog," said David Neslin, the commission's executive director.

The agency has added temporary staffers and changed its computer system to speed applications, he said.

The backlog in permits has been cut from 2,000 in April to 700 last week, Neslin said.

The average time for processing has dropped from 80 days in June to 50 days in August. "I think we are going to reduce it further," Neslin said.

Anadarko is counting the time from the day it files to the day it receives the permit.

The state commission does not count the time it has to verify an application is complete--up to 10 days--and the 10 days after approval for property owners to file challenges.

"We are counting differently, but the governor's office and the commission staff have really been responsive," said David Howell, Anadarko's general manager for the Wattenberg field.

"Both sides are cooperating," Howell said. "We expected the new regulations to lengthen the permitting."

Anadarko, the second-largest U.S. natural gas producer after BP PLC (BP), has major plays in Africa, Brazil and the Gulf of Mexico. The old Wattenberg field in Colorado's Weld County has also proved valuable.

"The Wattenberg is central to our strategy of a more predictable resource base," Hackett said.

The company can drill a well in four days, and the wells yield not only natural gas, which has suffered a depressed market in 2009, but higher-priced liquids and oil.

Liquids rose to 42% of Anadarko production in the third quarter from 37% at the beginning of 2009, with contributions from the Wattenberg and Utah's Natural Buttes, according to an analysis by David Heikkinen of Tudor, Pickering, Holt & Co. Securities.

"We've made investments in new pipeline capacity, which should help with prices," Hackett said. "And we are looking to make more investments."

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