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Apache boosts B.C. shale prospects
Exploration success in the Ootla shale gas play of northeastern British Columbia figures in Apache’s future growth as the big independent aims to boost production by 100,000 barrels of oil equivalent per day over the next four years.
It also helps Apache refocus its Canadian drilling program to offset what Chief Executive Officer Steven Farris said was a “short-sighted decision by the Alberta government” to make a significant hike in royalties.
He said Apache has scheduled a nine-well program in Ootla for this winter with its 50 percent partner EnCana.
“Our goal is to determine whether this play is commercial and we’ll be experimenting with different multi-stage fracturing programs to enhance the flow rates,” he said.
Speaking to a conference late last year, Apache Chief Financial Officer Roger Plank said that once the technology is developed the shale play in the Horn River Basin has the potential to develop 1,200 net locations at 3 billion to 4 billion cubic feet per well.
Apache estimated a commercial operation could boost its reserves by a net 3 trillion to 6 trillion cubic feet.
Important step in 2007 Farris said Ootla “took an important step forward” in 2007.
“We drilled and tested one horizontal well and tested two wells that we had previously drilled vertically,” he said.
While British Columbia will benefit from Apache’s 2008 capital spending, the company has slashed its Alberta budget by 40 percent — although its Canadian spending will remain basically unchanged in 2008 at $625 million — mainly cutting back deep gas drilling and medium-depth gas and oil, limiting its activity in the province to shallow gas opportunities, which the company said were not affected by royalty changes that take effect in 2009.
Apache’s Canadian oil production dropped last year to 18,756 barrels per day from 20,715 bpd in 2006 and gas volumes slipped to 388.2 million cubic feet per day from 404.3 million.
Company has been shale booster Apache has consistently been one of the leading boosters of B.C. shale prospects, which experts see as a vital element of the province’s production, where conventional gas — as in Alberta — is shrinking and unconventional resources (notably tight gas) make up about one-quarter of production.
Shale gas rights dominated provincial government land sales in 2007, with bonus payments totaling more than C$900 million — C$526 million in the Upper Montney, C$359 million in the Horn River Basin and C$44 million in the Cordova Embayment.
The leading bidders, in addition to Apache and EnCana, have been Devon Canada, EOG Resources and Nexen — proof that deep pockets, heavy front-end costs and an ability to take risks are the first credentials.
One of the drawbacks is a B.C. regulation that allows operators to sit on drilling information for three years — a restriction that some observers believe will slow progress.
—Gary Park
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