Texas-headquartered U.S. Energy Development Corp. is diving into the Columbia Project development in the Permian Basin with Shell Oil Co., having acquired an $8.5 million interest in the project.
The firm’s involvement in the project, which carries a $24.1 million total development cost, includes drilling three horizontal wells targeting oil in the Wolfcamp formation in West Texas’ Loving County, U.S. Energy said in a news release Sept. 16.
The move adds to the company’s position in the Permian, where it is also developing three horizontal Wolfcamp wells in nearby Ward County, Texas, on acreage acquired in 2019. The private E&P said it plans to pump $40 million into the Ward County project by the end of the year.
“Our team is always looking for opportunities to provide our investors with high quality projects,” U.S. Energy Jordan Jayson said in the statement. “We have historically found great success in the Permian Basin and look forward to further expanding our footprint in the area.”
Initial production at the Shell-operated Columbia project is expected to start in the fourth quarter.
The company’s gas production in 2019 was at 29.67 Bcm, a jump of 7.2% from the prior year.
The natural decline rates of existing oil and gas wells across major shale plays in the U.S. will contribute to a tighter supply/demand balance.
Under a deal with the government the 70-km (44-mile) pipe will have capacity for 950 million cubic feet of gas per day from fields operated by Noble and will be ready in first-quarter 2021.