Effects of Encana shuffle uncertain on West Slope

Kelly Sloan

Kelly Sloan, The Business Times

It’s not yet certain how changes to Encana will affect the operations of the Canadian-based oil and natural gas production company in Western Colorado.

In a major restructuring, Encana is cutting its work force, closing offices and narrowing and redirecting its focus. Doug Suttles, a former British Petroleum executive who became chief executive officer of Encana in June, is making the changes in the wake of low natural gas produces and redirecting assets toward oil production.

Encana spokesman Doug Hock said the company has identified five major oil plays into which the company will direct 75 percent of its capital. One of these plays is the Denver-Julesburg basin in Northeast Colorado, which contains the prolific Niobrara shale oil formation.

The Piceance Basin in Western Colorado, a predominantly natural gas field, was not on the list.

However, Hock said the remaining 25 percent of Encana capital will be spent on non-core assets like the Piceance and a key joint venture agreement the company has entered into with Nucor Steel that will probably mean drilling will continue in the basin. “We have entered into a 20-year deal with Nucor in the Piceance, so we will continue to drill there as we continue to honor our commitment.”

Encana entered into the joint venture with the North Carolina-based steel manufacturer last year, which sees Nucor sharing drilling costs in exchange for a steady supply of natural gas it uses to produce steel. The agreement calls for the drilling of up to 4,400 gas wells over the next 20 years in Garfield and Rio Blanco counties.

Still, Hock said it remains to be seen just how the company’s internal changes will affect activity in Western Colorado. For now, he said there are no planned reductions in the Parachute office, which still employs 170 people “We will know more in coming weeks as we work out our strategy,” he said.