{"id":71212,"date":"2016-11-22T23:02:58","date_gmt":"2016-11-23T06:02:58","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/conocophillips-to-sell-off-assets-in-san-juan-basin\/"},"modified":"2016-11-23T06:02:58","modified_gmt":"2016-11-23T06:02:58","slug":"conocophillips-to-sell-off-assets-in-san-juan-basin","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/conocophillips-to-sell-off-assets-in-san-juan-basin\/","title":{"rendered":"ConocoPhillips to sell off assets in San Juan Basin"},"content":{"rendered":"\n

\"ConocoPhillips,
ConocoPhillips, the largest operator in the San Juan Basin gasfield, which spans across northern New Mexico and southwestern Colorado, will sell off all its assets, the company recently announced.<\/span>JERRY McBRIDE\/Durango Herald file<\/span><\/figcaption><\/figure>\n<\/p>

ConocoPhillips, the largest operator in the San Juan Basin, a natural gas and oil field that spans across northern New Mexico and Southwest Colorado, will sell off all its assets, the company recently announced.<\/p>\n

Davy Kong, a ConocoPhillips corporate spokeswoman, said the company\u2019s decision earlier this month to sell up to $8 billion of mostly North American natural gas assets would include all of the 1.3 million acres of leasehold in the San Juan Basin.<\/p>\n

\u201cWe\u2019ve set a target of $5 to $8 billion of proceeds from asset sales over the next 2 years,\u201d Kong wrote in an emailed response. \u201cWe expect to market several assets, but will only consider offers that recognize their full value.\u201d<\/p>\n

ConocoPhillips has been active in the San Juan Basin \u2013 an area rich in coal-bed methane\u2013 for more than 50 years, operating approximately 10,000 wells throughout Colorado and New Mexico, Kong said. The company also purchased all of Burlington Resources\u2019 assets in 2006 for $35.6 billion, a significant portion of which was focused in the basin.<\/p>\n

ConocoPhillips\u2019 decision to leave the Four Corners is yet another blow to a region suffering from prolonged bust years as a result of the declining price of natural gas, a trend the Houston-based international energy company was not immune to.<\/p>\n

According to data taken from the Colorado Oil and Gas Conservation Commission, ConocoPhillips has undergone a 68 percent decrease in production in La Plata County since its peak year in 2003.<\/p>\n

This year, the company is on track to dip even lower into production totals.<\/p>\n

The sale, however, could have significant impacts to La Plata County\u2019s operating budget of $77 million, of which, ConocoPhillips and its subsidiary, Burlington Resources, contribute nearly $2 million.<\/p>\n

Kim Carpenter, executive officer of San Juan County (New Mexico), told The Durango Herald he was informed by ConocoPhillips the company would continue operations as usual until it has found a successful bidder, therefore possibly ensuring a seamless transition of assets to a new operator that would continue to pay taxes and employ workers.<\/p>\n

Yet uncertainty in the long-term stability of the natural gas industry, as well as the possibility of a purchase by the Southern Ute Indian Tribe in Ignacio, which would not have to pay property tax because of its sovereign status, has put La Plata County\u2019s revenues further in question.<\/p>\n

\u201cThat would be a hit,\u201d said Allison Aichele, La Plata County treasurer, adding the company is consistently within the top 10 taxpayers to the county. \u201cObviously, they used to pay a lot more, but that\u2019s still a significant amount of money for La Plata County.\u201d<\/p>\n

In 2014, Burlington Resources and ConocoPhillips, respectively, were the fifth- and sixth-largest producers of coal-bed methane in La Plata County, which contributes nearly 75 percent of the state\u2019s coal-bed methane production.<\/p>\n

Yet production across La Plata County, too, has seen a fall: In 2003 (ConocoPhillips\u2019 peak year) production was at 410 million cubic feet of natural gas. In 2015, that number was nearly cut in half at 264 million cubic feet, according to the COGCC. And 2016 is estimated to continue that downward trend.<\/p>\n

ConocoPhillips declined further comment for this story, but Christi Zeller, executive director of the La Plata County Energy Council, said the sale of the company\u2019s assets should not be cause for alarm.<\/p>\n

\u201cThis is just one piece of the picture that we\u2019ve seen in the last year to two years,\u201d she said. \u201cThis is a buying and selling time in our industry.\u201d<\/p>\n

Zeller referenced the Sept. 2015 bankruptcy of Tulsa, Oklahoma-based Samson Resources, which was La Plata County\u2019s second largest operator, paying nearly $3.4 million in property taxes annually.<\/p>\n

Though there was a period of uncertainty, all of the company\u2019s assets in La Plata County were purchased last month by the Southern Ute Indian Tribe\u2019s natural gas and oil production company Red Willow Production Co. for $115.5 million.<\/p>\n

The Southern Ute Indian Tribe declined comment for this story.<\/p>\n

Megan Graham, spokeswoman for La Plata County, said the tribe is exempt from the financial burden, and instead, the county will receive a \u201cpayment in lieu of taxes\u201d to compensate for the loss. She did not have information on where those funds would come from or a specific amount, but said it would \u201cnot be the full\u201d $3.4 million.<\/p>\n

Regardless, Zeller said it could take a few years to see the actual impacts of ConocoPhillips selling its assets. The majority of ConocoPhillips\u2019 500-plus employees in the basin reside in New Mexico, sparing La Plata County from mass layoffs or cut-backs, Zeller said.<\/p>\n

\u201cThis is not a fire sale,\u201d Zeller said. \u201cSan Juan Basin assets are still strong and viable. But we\u2019ll continue to see some changes.\u201d<\/p>\n

Indeed, other operators in the basin, namely Chevron and Energen, have recently sold their assets in the San Juan Basin because of the industry downturn, whereas BP announced in December 2015 its \u201cfirst major acquisition in seven years\u201d \u2013 480 wells across 33,000 acres.<\/p>\n

\u201cThis acquisition clearly demonstrates the importance of New Mexico and the San Juan Basin to our future,\u201d David Lawler, CEO of BP\u2019s U.S. lower 48 onshore business, said at the time. BP is by far La Plata County\u2019s largest property taxpayer, contributing more than $17.8 million in 2015.<\/p>\n

However, La Plata County Commissioner Gwen Lachelt said the departure of ConocoPhillips is yet another indicator of the county\u2019s \u201cdire financial situation\u201d as natural gas prices, traditionally the most reliable form of property-tax revenue, continue to decline.<\/p>\n

\u201cIt\u2019s grim, and we\u2019ve been anticipating this for a few years,\u201d Lachelt said. \u201cWe have to start having a very serious long-term conversation about how we fund county government going forward now that the major contributors to property tax revenues are going away.<\/p>\n

\u201cIf people are going to continue to expect the same level of service, something is going to have to change.\u201d<\/p>\n

jromeo@durangoherald.com<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

significantly impact La Plata County operating budget<\/p>\n","protected":false},"author":1,"featured_media":71213,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[221,477],"naviga_topic":[],"class_list":["post-71212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-gas-and-oil","tag-natural-gas"],"acf":[],"author_name":"dh_admin","_links":{"self":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/71212","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/comments?post=71212"}],"version-history":[{"count":0,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/71212\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media\/71213"}],"wp:attachment":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media?parent=71212"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/categories?post=71212"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/tags?post=71212"},{"taxonomy":"naviga_topic","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/naviga_topic?post=71212"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}