Enbridge Gas Utah seeks PSC approval for $150 million WexPro horizontal‑drilling pilot

Enbridge Gas Utah presented a proposal at a Utah Public Service Commission technical conference to authorize a $150 million WexPro horizontal‑drilling pilot intended to test new low‑permeability reservoirs and expand the utility’s drilling inventory.

Company presenters said the pilot would begin with a focused, stepwise effort — an initial four‑well technical pilot in a prioritized target (identified in the filings as the “Island” target) — and that each well would be evaluated individually by the hydrocarbon monitor before its capital was added to rate base. The company described the budget as a multi‑year authorization intended to reduce long‑term uncertainty about horizontal well results and to provide data to guide later development decisions.

Why it matters: WexPro wells are included in Enbridge’s cost‑of‑service supply, which generally provides customers with more stable bills than relying entirely on market purchases. Company speakers said horizontal development can produce very large wells on average but carries wider per‑well outcome variance than the vertical programs historically used in Enbridge’s footprint. Commissioners and Division staff repeatedly pressed the company on who would bear the cost of uneconomic ("dry") wells under the proposed pilot and on what guardrails would protect customers.

Key details presented - Pilot budget: the company requested up to $150 million in authorization for a controlled, stepwise horizontal program. Company representatives said the first four pilot wells would represent roughly $50 million of that total and would be individually reviewed. (Company presentation) - Timing: the application requests an expedited (roughly 60‑day) approval window so the company could begin drilling this season; the presenters said a first spud is targeted for June if approval is granted. (Company presentation) - Risk sharing: under current WexPro arrangements explained in the conference, customers historically share in some dry‑hole cost (the panel described prior mechanisms including a 50/50 sharing arrangement and a cap on customer exposure). Company presenters acknowledged the horizontal pilot would change the risk profile and that the filed structure would increase customer exposure to uneconomic well costs within the pilot compared with recent sharing arrangements; commissioners asked whether alternative structures (for example, raising the existing customer cap rather than full customer exposure) had been modeled. (Commissioners/Company exchange) - Intended benefits: presenters said owning production through WexPro has yielded long‑term customer savings and bill stability compared with relying only on market purchases, and that successful horizontal development could lower Enbridge’s cost‑of‑service gas (company forecasted some horizontal targets could approach ~$2 per unit in favorable cases). They emphasized the pilot is meant to quantify statistical uncertainty before larger scale commitments. (Company presentation) - Reporting and oversight: the company proposed quarterly drilling updates and an annual report; the hydrocarbon monitor and Division staff would review technical analyses. Company witnesses indicated additional technical detail would be provided under confidential filings. (Company/Division)

Points of concern raised by commissioners and regulators - Allocation of uneconomic well costs: commissioners repeatedly pressed the company to explain why the pilot shifts more dry‑hole exposure onto customers and whether intermediate options (e.g., raising the customer cap from 9% or keeping a 50/50 split up to a higher threshold) were considered. The company said it had examined alternatives but noted tradeoffs between incentives and rate impacts. - Uncertainty and heterogeneity: staff and commissioners asked for clearer statistical evidence about expected distributions of well outcomes for the proposed lateral targets; the company said detailed geoscience and modeling would be provided in confidential exhibits. - Schedule and pace: multiple participants questioned the requested 60‑day approval timeline; the company said the accelerated clock was sought so it could contract rigs and, if approved, spud a first well in the drilling season.

What was not decided No formal approval or vote occurred at the technical conference. The application remains before the commission; commissioners signaled they expect confidential technical filings and said they could halt further drilling authorization if pilot results or oversight reporting suggested unacceptable outcomes.

Next steps Enbridge’s application will remain under commission review. Company witnesses said they would file confidential technical backup for staff review and planned the formal reporting cadence (quarterly updates, annual reports) if the pilot is approved. The PSC facilitator closed the technical conference at the end of the session.

Attributions The presentation and most technical explanations were delivered by Enbridge/WexPro staff and company presenters (company slides and the on‑record technical conference). Commissioners and Division of Public Utilities staff asked questions throughout; the conference transcript records questions from Commissioner John Harvey and others and shows the facilitator Melinda Cranial opening and closing the session. A company representative said, “If we can get one well this year, then we've got to have approval of it pretty soon,” in the context of the timing request for drilling approval. (Austin Summers, Enbridge Gas Utah, on the record in the technical conference.)