The Next Oil Rich Shale on the Block? Encana Corp. releases first Mancos Shale results
Encana Corp. releases first Mancos Shale resultsdaily-times.com
The well, Lybrook H36, yielded a 30-day initial production rate of about 440 barrels of oil per day, Encana disclosed to investors.
An Encana spokesman said the initial production was enough to warrant further development. "That's an indication that we're pleased with the results we've seen to date," Encana's Doug Hock said.
The figure is the first publicly released data from a test well targeting Mancos Shale oil.
Geologists and industry officials have expressed hope that technological advances would enable wells to reach the oil-rich shale in the San Juan Basin, an area better known for producing natural gas.
Encana is partnering with local firms, including Aztec Well Servicing Co. and Dugan Production Corp., to exploit leases in the southern portion of the basin targeting oil-rich formations. Aztec is drilling the wells, and Dugan has taken advantage of its property interests in the area.
A sharp decline in natural gas prices has driven drillers to search for oil.
"Our strategy as a company right now is to increase the amount of natural gas liquids and oil in our portfolio," Hock said. "Given that, our exploration in the San Juan Basin is a key part of that, and that's why you've seen the commitment there to explore that."
Encana has a 174,000-net-acre position in the basin, the company said.
A major firm based in Calgary, Alberta, Encana has four Mancos Shale wells producing oil and a fifth being drilled, the company disclosed. Lybrook H36 was drilled into the Gallup formation, part of the Mancos Shale, to a lateral length of 4,100 feet and at a cost of $4.3 million.
The well is located about 50 miles south of Bloomfield in Sandoval County.
At current oil prices, the well is producing more than $35,000 a day. (Beats a government subsidy all to heck. Peter)
The production is about 10 times what one would expect from a traditional vertical well in the Gallup formation, said John Byrom, president and CEO of D.J. Simmons Inc., a Farmington independent producer.
"I'd take it," Byrom said.
Steve Dunn, drilling and production manager at Merrion Oil & Gas in Farmington, said the results are "very encouraging."
Merrion also is active in the Mancos Shale, partnering with a larger company to drill four wells. Dunn said he cannot disclose the partner. Merrion plans to drill its wells in September, he said.