Durango Herald An unidentified drilling rig south of Durango is seen in 2012 at an existing well pad near U.S. Highway 550. ConocoPhillips has struck a deal to sell its San Juan Basin assets for up to $3 billion
Oil giant BP has made a natural gas discovery in the Mancos formation of the San Juan Basin near the Colorado border that could help revive the fortunes of an out-of-favor region.
The company, which is relocating the headquarters for its U.S. onshore operations to Denver, said Monday a new well it drilled seven miles south of the the Colorado border in New Mexico averaged production of 12.9 million cubic feet of gas per day, the highest achieved by a well in that area in 14 years.
“Given the very strong initial production rates of this well, we believe there is potential for the Mancos Shale to be a large gas play,” said spokesman Brett Clanton. “It’s still early, but based on this initial success, we will be drilling more wells in the Mancos this year.”
West Slope petroleum reserves skew toward natural gas, and producers there have struggled with depressed prices and competition from cheaper-to-exploit fields in Pennsylvania and Ohio. Last November, drilling activity in the San Juan Basin, which covers southwest Colorado and northwest New Mexico, came to a complete stop.
But the U.S. Geologic Survey last summer announced that the Mancos Shale, a formation that runs under western Colorado and northern New Mexico, had 40 times the petroleum reserves than first estimated.