VERNAL -- Utah's largest producer of crude oil plans to invest $500 million in the state this year as it steps up its drilling and assessment operations.
Newfield Exploration Co. has earmarked one-third of its 2012 budget for operations in the Uintah Basin, the Deseret News reported.
"It's a key year for us," said Daryll Howard, vice president of the company's Rocky Mountains division. "We have growth plans for the Uintah Basin, just domestic oil growth plans, that will be just north of 20 percent growth."
The Houston-based company purchased the Monument Butte field, straddling the Duchesne-Uintah county line, for $575 million in 2004 from Inland Resources.
Howard called the field a "foundational asset" for the company "with a decade or more of drilling opportunities."
Newfield currently has seven drilling rigs running in the Uintah Basin, an increase from its traditional five-rig program, he said.
"We'll continue to increase that rig fleet as our assessment plans unfold and create development opportunities," Howard said. "We have a vision for nine-plus rigs in 2013."
Newfield has accounted for roughly one-third of the oil produced in Utah in each of the past three years, according to the Utah Division of Oil, Gas and Mining.
Utah receives more than $10 million annually in royalty payments and severance taxes from Newfield. Between 2005 and 2010, the state received more than $50 million in ad valorem and production taxes from the company.
Newfield has faced a challenge in securing sufficient refining capacity for the black wax crude oil found in the Uintah Basin. Because of its high paraffin content, it is too thick to be put through a pipeline like light, sweet crude oil.
In January, the company signed long-term supply contracts with HollyFrontier Corp. and Tesoro Corp., which operate two of five refineries in Utah.
Plans call for Newfield to supply the HollyFrontier refinery with 20,000 barrels per day beginning in 2014, and to provide the Tesoro refinery 18,000 barrels per day beginning in 2013.