Fingers crossed for U.S. energy bill

EnCana hopes U.S. legislators will find a way to rescue the energy bill that offers healthy tax breaks to stimulate natural gas production from unconventional sources.

Chief Executive Officer Gwyn Morgan said the rate of return on its new U.S. wells could climb by 4-5 percent in its core U.S. Rockies region, where it expects production to climb about 21 percent next year to 825 million-875 million cubic feet per day, by slashing red tape, promoting land access and building vitally needed pipeline connections. He said 100 percent of the Rockies “is qualified as unconventional gas, so that means that all new wells we drill will qualify for tax credits.”

Morgan described the bill as “tailor made” for EnCana because of the emphasis on improving the economics of Rockies development, where the company has budgeted C$1.32 billion for 2004, or nearly a quarter of its spending.

Although EnCana has had encouraging results at its Mamm Creek coalbed methane property in Colorado, Morgan acknowledged the coalbed methane concerns of environmentalists and ranchers by pledging to work with those groups to minimize negative impacts on freshwater supplies.