Thursday, July 22, 2010

Encana, Shale Gas And Horizontal Drilling

Encana is another major player in the development of shale gas resources in the United States and Canada.

Encana sees N. America gas play efficiencies

Jul 22, 2010

Alan Petzet
OGJ Chief Editor-Exploration (source)
HOUSTON, July 21 – Encana Corp. has only just begun to implement the gas factory approach in its North American resource plays and sees large operational and cost efficiencies in doing so, company management said on a July 21 conference call.

The company hiked its capital spending $500 million to $5 billion in 2010, to be spent $300 million in Canada and $200 million in the US. Encana boosted the budget due to strong performance from its resource plays this year.

Encana said it realized just under $4.70/MMbtu for its gas year to date and that it estimates that a price closer to $6 is required to balance markets in North America.

Encana is looking for ways to manage completion costs, which it said make up 40% of all-in capital cost per well, including fit-for-purpose skid-mounted equipment and potential long-term partnership arrangements with service providers.

Haynesville shale
Encana is in a land retention strategy in the Haynesville shale play, having drilled 41 net wells in the first half of 2010.

The company needs to drill 100 more wells this year and 150 in 2011 to hold its acreage. It moved five to six rigs into Louisiana from the East Texas Deep Bossier gas play this year to help hold acreage and is running 26 rigs in the Haynesville.

The company’s Brent-Miller well in Sabine County, Tex., went to 14,500 ft vertically and flowed 25 MMcfd of gas from a first horizontal leg and 32 MMcfd after a second leg was added. Besides proving up 45,000 net Encana acres on the Texas side of the play, the high pressure-high temperature well demonstrated high reservoir quality at depth.

It performed as well as any we have seen in the play to date, Encana said.

The company produced a net 270 MMcfd of gas equivalent from the Haynesville in the second quarter and is on track to average 325 MMcfe/d this year and end the year above 500 MMcfe/d.

Encana will launch its first gas factory approach in the Haynesville shale by drilling eight wells from a single pad in DeSoto Parish, La., later this year.

It will employ gas factories from the outset in the Horn River basin of Northeast British Columbia, where it may be able to develop as much as 5 sq miles from a single drillsite. It plans to drill 16 wells/pad with legs 3,000 m or longer and 20-28 fracs/well.

Collingwood shale play
Encana revealed little about its Collingwood/Utica shale discovery in the Michigan basin, the only well the company is aware of in that play, because another Michigan lease sale looms this October.

Encana said the first exploratory well on the 250,000-acre position it has built over several years was subcommercial, but the company continues leasing in the play.

Encana said the first well’s costs were too high and the type curve insufficient for commercial development, but it proved the existence of gas and liquids in the petroleum system.

Canadian joint venture
Encana decided it would take 18 years, much too long for shareholders, for it to exploit its Canadian gas plays at its current drilling rate of 1,300 wells/year.

So it is discussing a previously announced joint venture with China National Petroleum Corp. in Greater Sierra, including parts of the Horn River and Montney plays, and Cutbank Ridge. As wells are drilled in those plays, Encana expects the drilling inventory to increase.

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