PROBLEM 1Mr. Ratikorn Sornumpol 5572233623

CONTENTNatural gas Production

Introduction oil well & overview market the Permian Basin and the San Juan Basin Properties of natural gas (GPM & Heat capacities) and

natural gas production rate Natural Gas Production in the San Juan Basin New Mexico gas average price & New Mexico gas

production volume Monthly permain rig count and oil production San Juan Generating Station (Natural gas power plant)

- Facilities

Problem 1 Rio Arriba County is a county located in the U.S. state of New Mexico.

Overview of Markets New Mexico oil and natural gas production primarily occurs in the Permian Basin and the San Juan Basin, with the former in the southeast and the latter in the northwest.The Permian Basin contains the majority of oil production and the San Juan Basin accounts for about two-thirds of natural gas production but only a small part of oil production. The San Juan Basin lies in Rio Arriba and San Juan counties.

Production levels in the state are dependent on various factors affecting output including: prices, well capacity, and both national and international trends in demand. Prices are one of the single most important drivers of the well activity in the state.

Calculation of GPM of gas Mole % Moles Gal/Mole GPMRio Arriba Country ,New

Mexico        He 0 0 0 0N2 0.68 0.017918786 0 0

CO2 0.82 0.021607948 0 0H2S 0 0 0 0CH4 96.91 2.553690479 0 0C2H6 1.33 0.035047037 10.119 0.354640966C3H8 0.19 0.00500672 10.424 0.052190045

C4H10 0.05 0.001317558 11.936 0.01572637C5H12 and heavey oil 0.02 0.000527023 13.712 0.007226541

Total 100 2.63511555   0.4297839211 lb mole of gas 379.49 ft3 SUBQUALITY GAS1000 scf of gas GPM<3

Constant 1/b mol /1000scf of gas 2.63511555 lb mole / scf  Mole % Cp at 100 F(Btu/ib-molR) γCp

Rio Arriba Country ,New Mexico      He 0 4.97 0N2 0.68 6.96 4.7328CO2 0.82 9.05 7.421H2S 0 8.2 0CH4 96.91 8.64 837.3024C2H6 1.33 12.9 17.157C3H8 0.19 18.19 3.4561C4H10 0.05 24.31 1.2155C5H12 and heavey oil 0.02 40.81 0.8162Total 100  872.101

γ = [Cp/(Cp-R)]Cp mixture -R 870.111BTU/lb-mol-Rγ 1.002287

Natural Gas Production in the San Juan Basin Production of natural gas in the San Juan Basin has been sliding in

comparison to the overall trend in New Mexico (Table 3). While total New Mexico production increased until 2001, output declined in the San Juan Basin since 1999. Output in the basin,measuring over 550 million MCF in 1980, increased to nearly 1 billion MCF in 2003.Production of natural gas declines faster in coal-seam beds. The basin’s share of the state’s natural gas output fell from 68% to 63% between 1999 and 2003. Natural gas production has yet to recover even with a high price in 2003.

In the San Juan Basin, 2003 output values were aided by higher prices despite falling production in 2003 (Table 4). The average price of natural gas received in the basin has tracked the New Mexico annual average for the last several years. Since the mid-1980s, the value of gas production rose faster in the basin than in the state – tripling versus doubling. Spikes in natural gas prices in 2000 and 2001 raised the value of natural gas produced in the basin. The value of natural gas produced in the San Juan Basin quadrupled, from $1.1 billion in 1980 to $4.1 billion in 2004.The value of natural gas produced in San Juan County rose from $724 million in 1980 to $2.7 billion in 2003. In Rio Arriba County, production values stayed around $400 million annually through the first half of the 1980’s and ranged between $200-300 million in the second half. In 1993 the value of natural gas output spiked to over $600 million and in 2003 climbed to $1.7 billion.

Figure 4 Compared to historical trends, recent natural gas prices have become more volatile. After 10 years of relative price stability, beginning in the mid-1990’s prices began to fluctuate more and generally moved sharply higher (Figure 4). In both 2000 and 2001, natural gas prices exceeded $3.75 per thousand cubic feet (MCF). After the price of natural gas dropped in 2002, it spiked in 2003 to a 25-year high of $4.65/MCF.

Figure 5 Natural gas production in New Mexico, shown in Figure 5, has faired better than oil production. Following the deregulation of the industry and its markets in 1986 and the offering of tax incentives for coal-bed methane production, natural gas production took off in the state. Natural gas also benefited from long-term supply contracts.

The Permian Basin—a long-time oil and natural gas producing region in west Texas and eastern New Mexico—is showing signs of new life. The active rig count has grown from 100 rigs in mid-2009 to over 500 rigs in May 2012. According to data from HPDI, oil production from the Permian has increased fairly steadily over the past few years, reaching the 1 million barrels per day (bbl/d) threshold in 2011—the first time since 1998

San Juan Generating Station San Juan Generating Station, located 15 miles west of Farmington, N.M., is a key source

of power for PNM and more than 2 million customers in the Southwest and West. San Juan's low cost and excellent reliability make it an important part of PNM's energy

portfolio, even as PNM adds more renewable energy to that portfolio. San Juan is: 4 units, coal-fired 1,800 gross megawatts PNM owns 46 percent and operates the plant on behalf of eight other owners. San Juan and its employees are actively involved in their communities: The plant has donated nearly $2 million to the San Juan College School of Energy to

support the college and help train future plant employees. The plant funds eight scholarships offered through an endowment at the San Juan

College Foundation. Employees support 14 main community projects every year, including a fire prevention

effort with local firefighters that reaches 8,000 elementary students.

San Juan Generating Station ConocoPhillips is the largest operator in the San Juan Basin, located in northwestern

New Mexico and southwestern Colorado. The company has a significant number of productive leaseholds and mineral acreage in this area. To offset the natural production decline rate, the company has an ongoing program of performing work overs on existing wells, adding compression and installing artificial lift when economic to do so.

Mesa Verde, Pictured Cliffs and Dakota formations The company continues to pursue development opportunities in these three conventional formations. The Mesa Verde Formation, which consists of the Lewis Shale, Cliffhouse, Menefee and Point Lookout sands, is the largest producing tight-gas formation in the San Juan Basin. Net production from the conventional tight-gas producing formations averaged 468 MMCFD of natural gas and 46 MBD of liquids in 2012.

Fruitland Coal (coal bed methane)In 2012, net production from the Fruitland Coal Formation averaged 282 MMCFD of natural gas and 3 MBD of liquids.

San Juan Gas Plant The San Juan Gas Plant, located in Bloomfield, N.M., is operated and 50 percent owned by ConocoPhillips, and has 550 MMCFD of naturalgas processing capacity.

FacilitiesFreeport LNG Terminal

In July, ConocoPhillips reached agreement to terminate its long-term agreement at the Freeport LNG Terminal. The agreement is subject to Freeport LNG obtaining regulatory approval

and project financing for a natural gas liquefaction and export facility, in which ConocoPhillips is not a participant. The agreement is expected to close in early 2014.

Wingate FractionatorThe Wingate Fractionator, located in Gallup, N.M., is 100 percent owned and operated by ConocoPhillips and has an inlet capacity of 25 MBD.