Providing coverage of Alaska and northern Canada's oil and gas industry
June 2008

Vol. 13, No. 25 Week of June 22, 2008

EnCana talks up shale gas plays

Horn River, B.C., Haynesville Shale in Louisiana and Texas compared in size to Barnett shale of north-central Texas, says EnCana CEO

Gary Park

For Petroleum News

EnCana, North America’s leading natural gas producer, has cranked the continent’s shale gas plays up another notch, without disclosing hard numbers from its activities in the Horn River area of northeastern British Columbia.

The big independent announced June 16 that it is building a dominant land and resource position in both Horn River and the Haynesville Shale in Louisiana and Texas, reporting that a “series of exploration wells has shown strong potential to deliver commercial volumes of natural gas.”

Chief Executive Officer Randy Eresman said wells drilled by EnCana, its partners and other companies “indicate these two resource plays hold the potential to eventually become amongst the largest in North America.”

He told a Canadian Association of Petroleum Producers investment symposium that Horn River and Haynesville are being compared in size and scope to the Barnett shale of north-central Texas, which currently produces 3 billion cubic feet per day and is still growing.

Eresman said EnCana, since discovering Horn River in 2003, has established a leading land and technology position, including 220,000 net acres, while its stake in Haynesville is now a net 325,000 acres.

He said each play has the potential to ultimately reach a net 1 bcf per day, comparable to what the company has announced at its more-established plays at Montney in British Columbia and Deep Bossier in East Texas.

Eresman said EnCana’s success in finding and unlocking the potential of some of the largest new unconventional plays in North America can significantly accelerate its growth rate “to an even higher sustainable level,” once Horn River and Haynesville are incorporated in its portfolio.

He said strong production from across EnCana’s resource plays and higher-than-budgeted cash flow due to more robust gas prices should allow the company to increase drilling and continue expanding its shale play land holdings.

But, for now, EnCana is disclosing only preliminary results from the four production wells it drilled in partnership with Apache at Horn River.

Eresman said two of the four wells have just started to flow, with early results pointing to strong production potential.

Speaking at the same symposium, ARC Energy Trust said its exploration in the Dawson area of the Montney play points to gas-in-place of 10 bcf to 100 bcf for every 640 acres, with an average recovery factor of 20 to 40 percent or 5 bcf per well.

It said an independent reserves evaluator has suggested that recovery factors may ultimately reach 60 to 70 percent, but that will depend on drilling density, completion technology and reservoir response.

Currently producing 44 million cubic feet per day at Dawson, ARC said the use of isolated, multi-frac horizontal completions have seen its average well costs drop from C$7.5 million for its first four wells, to C$6 million for its next six. It is now budgeting for C$5.5 million per well this year.

A presentation by Canadian Natural Resources said it has ultimate drilling activity of 360 wells in Montney and 800 wells in British Columbia’s Muskwa Shale, with an additional 275 wells in the Doig Shale of Alberta, compared with a combined current prospect inventory of 109 wells for the three plays.

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