Alaska remains EnCana priority

Gary Park

PNA Canadian Correspondent

Alaska, although still a blip on EnCana Corp.’s radar screen, is coming more sharply into focus for the big Canadian independent. Gwyn Morgan, CEO of the Calgary-based company, in a Feb. 5 presentation to a Credit Suisse First Boston energy summit, listed Alaska, along with the Gulf of Mexico, Australia and North Africa among EnCana’s “high-impact opportunities to be drilled.”

Although there was no mention of upcoming Alaska drilling in the company’s Feb. 20 news release containing highlights of its first year in existence and its plans for 2003, EnCana is now being rated among the likely bidders for leases in the National Petroleum Reserve-Alaska.

Along with ConocoPhillips Alaska Inc., Anadarko Petroleum Corp. and TotalFinaElf, the company has expressed optimism that NPR-A has untapped potential, despite the shrinking interest in the region by BP p.l.c. and Exxon Mobil Corp. EnCana picked up its first leases in the NPR-A in June.

In a conference call with analysts Feb. 20, Gwyn Morgan dealt only briefly with a question on the McCovey prospect, where EnCana decided in early February to permanently plug and abandon its winter well, while pledging to continue exploration in the state.

Morgan said he had “nothing new to report” on McCovey, noting it was normal for a well to be plugged and abandoned without any comment being made until after the mandatory period for disclosure.

The well was drilled to earn EnCana a 30 percent interest in offshore leases held by a 50-50 partnership of ConocoPhillips and ChevronTexaco.

2003 growth programs

• The U.S. Rockies gas plays in Wyoming and Colorado, where production almost doubled in the fourth quarter of 2002 to 654 million cubic feet per day (after starting at 93 million cubic feet per day in 2000) and could grow to 725 million cubic feet per day this year (before royalties). Growth through the drill bit has boosted reserves to 2.7 trillion cubic feet of gas equivalent and EnCana believes the region has multi-trillion cubic feet of unbooked reserves potential from infill drilling.

• In the Gulf of Mexico, EnCana and its partners are drilling two appraisal wells, scheduled for completion in the second quarter, on the Tahiti oil discovery, which is operated by ChevronTexaco and contains up to 125 million barrels of recoverable oil net to EnCana, which has a 25 percent working interest.

• EnCana has more than 30 rigs running in the Greater Sierra gas play in northeastern British Columbia, where the company has a 2 million-acre land base and a five-year inventory of more than 600 well locations. Greater Sierra, where sweet gas in place has been projected at more than 5 trillion cubic feet, produced 145 million cubic feet per day last year, easily offsetting the decline in the Ladyfern field, also in northeast British Columbia.

• In Alberta’s oil sands, EnCana has an estimated 30 billion barrels of reserves, which is currently yielding 20,000 barrels per day at Foster Creek, using steam-assisted gravity drainage technology. It is aiming to grow in stages past 100,000 barrels per day by 2007, with the addition of its Christina Lake project.

• Ecuador’s Oriente Basin, constrained by pipeline bottlenecks, is forecast to grow from 50,000 barrels per day in 2002 to as much as 90,000 barrels per day, after a new pipeline project comes on stream in mid-2003.

• The Buzzard field in the United Kingdom North Sea holds an estimated 180 million barrels net and, depending on regulatory approvals, is expected to give the company 75,000 barrels per day when the project peaks in 2007.

Editor’s note: See related EnCana story on page 13.