EOG Resources moving into CBM ranks

Gary Park

Petroleum News Calgary Correspondent

Coalbed methane is stirring the interest of more operators in Alberta, with Houston-based EOG Resources the latest to signal its intention to follow the lead of others in southern Alberta.

EOG has drilled 17 coalbed methane wells on 120,000 net acres in the area so far this year and now plans another 100 Horseshoe Canyon wells as part of a 1,300-well program in southern Alberta, Chairman and Chief Executive Officer Mark Papa told a conference call Aug. 3.

He said EOG hopes to copy the coalbed methane success of other operators on nearby lands by incorporating coalbed methane into its larger drilling operations.

Papa said EOG estimates it has 375 potential coalbed methane locations in southern Alberta that it views as “quite economic” based on initial drilling results and the potential for further coalbed methane development.

Meanwhile, MGV Energy, a unit of Quicksilver Resources, boosted its coalbed methane-dominated gas production almost four-fold in the second quarter to 1.84 billion cubic feet from 486 million cubic feet in the same period of 2003 and expects to end 2004 with output as high as 40 million cubic feet per day as more coalbed methane comes on stream.

The company completed 152 net wells in the first half of 2004 and forecasts another 131 for the balance of 2004.

Quicksilver President Glenn Darden told a conference call that the bulk of current production is from wells that average only 90,000 to 130,000 cubic feet per day, but farther north in the Palliser area rates have gone as high as 400,000 cubic feet per day.

Thunder Energy said it is advancing plans to increase coalbed methane volumes in Alberta now that it is averaging about 70,000 cubic feet per day from 12 wells in the Fenn-Big Valley area of the Horseshoe Canyon formation.

In July it moved to the next stage by launching a 40-well program in the Belly River/Horseshoe Canyon area.

Once those are connected Thunder expects to have 60 producing well bores with an average 75,000-80,000 cubic feet per day, said President and Chief Executive Officer Doug Dafoe.

MGV, along with EnCana and Apache, dominates Canada’s fledgling coalbed methane sector, which is expected to achieve combined production of about 150 million cubic feet per day by the end of 2004, just two years after the commercial debut.