Devon Energy Corporation: Little Company Doing Big Things

Devon Energy is the largest natural gas producer in Fort Worth's Barnett Shale with much more to do in upcoming years.

Drilling in Barnett Shale

To date, Oklahoma City-based Devon has produced 2.2 trillion cubic feet of natural gas with its 18 rigs, which make up 20 percent of Barnett's rigs. And the natural gas company expects to produce 18 trillion more cubic feet of natural gas in the next decade. 18 trillion is the equivalent of 80 percent of gas consumption in the U.S. on an annual basis. If one player in one shale play can accomplish that, it could mean serious numbers when you combine all companies and shale plays.

In spite of gas prices dropping below $4 per million British thermal units (BTUs), Devon will continue to keep its 4200 wells busy with 7500 more planned. The company and its staff of 550 is the only one in Barnett Shale to produce over 1 billion cubic feet of gas daily out of the estimated 140 operators there. Devon credits its success due to being one of the first to start horizontal drilling in Barnett and on prime land.

Carbon Credits for Reducing Emissions

Devon is also retrofitting its Wyoming well locations to cut down on methane emissions to sell more gas and gain carbon credits. Carbon-trading group American Carbon Registry (ACR) has certified Devon's carbon emissions project making the company the first to receive certification in the oil and gas industry. When ACR certifies a company, it means the company is complying with American Carbon Registry Standards.

If other oil and gas companies follow Devon's example, the industry could earn over $1 billion in carbon credits. The way to go about the process is to retrofit the pneumatic controls to swap out "high bleed" controllers with "low bleed" ones to drastically lower methane gas from leaking into the atmosphere. Instead of leaking 960 cubic feet of methane gas per day, retrofitting cuts that down to 6 cubic feet per day.

Natural Gas Industry Report

President Obama's drilling plans, the company appearing on T. Boone Pickens' portfolio and a Wall Street Journal story  (requires subscription) will further fuel Devon's successes as well as others in the oil and gas industry. The WSJ story reports that the Department of Energy (DOE) may have overestimated natural gas supplies.

Apparently, there is a flaw in how the DOE collects its 914 report data from natural gas producers in the U.S. The oil and gas industry relies on the 914 report as a guide for capital investments, stock recommendations and predicting natural gas prices. The DOE's statistical unit says that changing the report's methodology will lead to notable decreases in some areas -- good news for our industry because the surplus brings prices down. If there's not a big surplus, then prices could go up soon.

Would you believe that Devon Energy was not in the top 30 of natural gas producers in Texas in 1994? As of 2008, Devon was number one.