Hints of big Horn River strike

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A partnership of parent company and offspring, ExxonMobil and Imperial Oil, is playing it coy on results from its exploration debut in British Columbia’s Horn River shale gas play, despite hints of something big.

An ExxonMobil executive told the Wall Street Journal that initial rates have been in the range of 16 million to 18 million cubic feet per day; a company spokesman later said tests of the first two wells drilled last winter flowed at about 2 million cubic feet per day, with the company issuing an e-mail saying the test wells “did not flow anywhere near the stated rates.” Imperial (owned 69.6 percent by ExxonMobil) declined to confirm any numbers.

The 50-50 partnership has joined an industrywide land rush into northeastern British Columbia, assembling a sizeable land position over the past two years, rating the play as a “new opportunity with considerable resource potential.”

William Lacey, an analyst with FirstEnergy Capital, said ExxonMobil’s involvement is “another endorsement for the region,” but he noted the supermajor focus on profit rather than return on capital suggests the company is not going to “rush out to develop.”

The Horn River test wells were drilled vertically and the well bore was punctured by a single perforation, while production wells are initially drilled vertically, then directed horizontally, when eight or more fracture intervals are made.

Current production from Horn River is only about 100 million cubic feet per day, about 2.5 percent of flows from the prolific Barnett shales in Texas and less than 1 percent of Canada’s total output.

—Gary Park