Production growth in 2006 and beyond was the stated goal for more than 120 E&P presenters at the 34th annual Howard Weil energy investment conference in New Orleans recently. About 450 buysiders returned to the battered city for the first large convention held there since Hurricane Katrina last year. "A significant increase in pricing and volumes is coming for us," declared Duane Radtke, president of Dominion's E&P business. The company ended 2005 with 6.3 trillion cubic feet of proved reserves. Thanks to the expiration of a volumetric production payment and several new offshore projects coming onstream, annual production is set to rise to 520 billion cubic feet equivalent from 445 billion, between now and 2008. Dominion expects to see a "structural uplift" in E&P between now and 2008, said Tom Farrell, president and chief executive of the parent utility company. Dominion is particularly strong in the Appalachian Basin, a large consumer of natural gas. "The U.S. Northeast would be the third-largest economy in the world, behind the rest of the U.S. and Japan, consuming 40% of the nation's energy," he said. This year the company will spend $1.8 billion on E&P, with $200 million of that on deepwater exploration. The E&P team does continuous "look backs" to evaluate results from its capital spending. "You can grow reserves if you spend enough, but the question is, are you making any money?" Radtke said. Houston-based Noble Energy Corp. also expects to see production growth. "We are a company that has dramatically changed-there is no resemblance to what we were five years ago," said chief executive Chuck Davidson. Noble has sold assets and acquired others to achieve a broad set of lower-risk onshore assets and a growth portfolio in the Gulf of Mexico and internationally. This year it will spend $700 million onshore North America-versus only $100 million spent onshore two years ago. Last year, it acquired Rockies-focused Patina Oil & Gas, which had three rigs working in the gas-rich Wattenberg Field in Colorado. Noble plans to hike that to 12 rigs by the end of 2007, he said. The hoped-for result? "Our production will be up 30% to 40% this year and 20% of that will be from organic growth," Davidson said. "A trend we'll see more of is large companies buying up smaller, private ones in these kinds of low-risk plays [such as Wattenberg] that consolidate in a field or area." The company recently expanded its Rockies holdings by buying one of these private companies: Montana-based United States Exploration Inc.
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