Pioneer Natural Resources saves itself a buck an Mcf by providing many of its own oilfield services in developing its coalbed-methane play in the Raton Basin of southern Colorado.

"That dollar margin goes to us," Jay Still, executive vice president, Western division, said at the second annual Developing Unconventional Gas conference in Fort Worth, sponsored by Hart Energy Publishing LP.

Drilling is the largest component of well costs (32%), and Pioneer controls some 50% of the rigs it uses in the play; stimulation costs are 26% and completion, 22%. Among stimulation costs, some 13% is for sand, which has been difficult to get.

"I've had a person full-time pirating the rails for unclaimed sand cars," Still said. A solution, instead, has been to develop its own frac-sand operation in Nebraska. "We have complete control of sand supply (now)."

The company also controls water trucks used in operations. "The margin on the water business is huge as well." And, he added, operators need to own their own gathering system. "If you can't...you're sunk."

But being in the service business isn't suited for all, he said. It works well when concentrated in a small focus area. Quality control is an issue when it is your own quality being evaluated: "It's hard to run yourself off."

And, workforce issues can be challenging. Pioneer hosted a job fair in the Southwestern U.S. two years ago; 70 people showed up. At first, they needed only a valid driver's license and to pass a drug test. Two people cleared the initial filters.

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