Higher prices allow Apache to resume drilling in Alpine High Play

Apache Corp. made national — and even international — headlines in the fall of 2016 when he announced what he believed to be a multi-billion barrel discovery in Reeves County, Alpine High.

The company also estimated that the find contained approximately 75 trillion cubic feet of natural gas. After working to develop the new area, Apache made the decision in 2019 to stop drilling at Alpine High in response to a drastic drop in natural gas and natural gas liquids prices and to direct that capital to higher assets. tankers in the United States, Egypt and the North. Sea.

But rising natural gas and NGL prices that began last summer prompted the company to return to its headline-grabbing game. This comeback began last year when Apache decided to complete several drilled and unfinished wells in the Alpe High – around six wells.

These newly completed wells provided good results and prompted authorities to add a fourth rig to its US operations – the third in its footprint in the Permian Basin – to be implemented in the Delaware Basin. Once this rig has completed six oil wells in the Delaware Basin, it will head to the Alpine High game in Reeves County, where it will drill two three-well rigs. The company has already received two drilling permits in the high Alps. Once arrived, probably in the middle of summer, it is planned to operate the platform in the Alpe High all next year.

Crude prices have undoubtedly been robust, Apache officials told the Reporter-Telegram, but natural gas and NGL prices have risen so much that they have made the Alpine High not only economical but competitive with other potential projects in Apache’s portfolio. Officials say they didn’t need the $9 per Mcf natural gas to run Alpine High, but they will take advantage of those prices. They also take advantage of the relatively new and environmentally friendly infrastructure – pipelines and treatment plants.

Apache also has a contract that gives it access to global LNG prices – a royalty to Cheniere gives it access to European and Asian markets at global LNG prices.

“It’s definitely Apache looking at a favorable environment when it comes to natural gas/NGL pricing,” said Stephen Sagriff, vice president, intelligence at the software company as a service focused on Enverus energy, to the Reporter-Telegram by e-mail.

Sagriff said the company’s first attempt at Alpine High “was extremely mistimed due to its overly aggressive development approach, coupled with low natural gas and NGL prices and the Waha base explosion in due to a limited Permian release Ultimately, everything that could go wrong did go wrong as the company’s out-of-game production increased dramatically.

Asked if the return of such a high-profile discovery might attract other companies, Sagriff said it was more a function of Apache looking at assets left for dead, but that the company s was hooked now that the environment for raw materials is more favorable.

“Apache peers – names exposed to the large-cap Permian – need not necessarily rush, as most hold an extremely deep shoal of high-quality oil-weighted inventory in the Permian, with many holding a high quality oil blend – and a gas-weighted inventory elsewhere in the major lower 48 basins,” he wrote. “That being said, it’s hard to imagine the industry as a whole turn a blind eye to Apache’s comeback, especially if early results look promising, if natural gas/NGL prices hold up, and if the overall macroeconomic story for natural gas, especially in the medium to long term, the term holds or accelerates in the direction of long-term bullish prices.

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