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EnCana leads CBM charge Targets 200 Mmcf per day; royalty-free Alberta lands keep costs low Gary Park Petroleum News Calgary Correspondent
EnCana has removed the wraps from its coalbed methane strategy, setting the most ambitious targets yet in Canada.
The big Canadian independent, after a period of quietly building its strategy and running a demonstration project in southern Alberta, has set the bar at 200 million cubic feet per day over the next five years.
Until now, coalbed methane has remained in its infancy in Canada as operators have dabbled and governments have worked on regulatory regimes, with total Canadian production estimated at a mere 15 million to 25 million cubic feet per day.
Bolstered by 700,000 acres of 100-percent owned, royalty-free lands, EnCana said Nov. 18 it is moving into high-gear to develop more than 2 trillion cubic feet of recoverable gas resources from coal.
It said a demonstration project, producing 3 million cubic feet per day from 35 wells just east of Calgary has been successful, opening the way for EnCana to start a 200-well program in the second half of 2003.
It expects 100 wells will be on stream by year-end, raising its coalbed methane output to 10 million cubic feet per day. With a budget of C$90 million, another 300 wells are forecast for 2004 to generate 30 million cubic feet per day, along with further appraisal drilling to identify future development opportunities. Wells cost about $C250,000 each Chief Operating Officer Randy Eresman said the company’s single coalbed methane sections in southern Alberta are estimated to contain an average 2 billion cubic feet of recoverable natural gas resource, based on 8 to 10 wells per section.
“We are drilling, completing and tying in these wells for about C$250,000 each,” he said, projecting the total life-cycle finding and development costs at about $1.50 per thousand cubic feet.
“The reservoir characteristics support long-term predictable anticipated gas production growth,” he said.
Subject to regulatory approval, EnCana also hopes to tie its shallow gas and coalbed methane production into existing well bores to minimize the number of new wells drilled, Eresman said.
He said the coalbed methane resource play, like EnCana’s traditional shallow gas plays, covers “great expanse and is estimated to hold multiple trillion cubic feet of recoverable gas.”
The technology used in the demonstration project can be applied to large repeatable drilling programs, driving down costs to achieve attractive financial returns, he said.
“CBM lands could potentially yield several hundred million cubic feet per day of long-life gas production,” Eresman said.
In addition the royalty-free lands, inherited from PanCanadian Energy, will help dramatically lower the cost of tapping coalbed methane, he said.
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