New find could rival existing Haynesville shale
U.S. shale play could be huge: EnCana
New find could rival existing Haynesville shale, company says
Calgary — Globe and Mail Update, Thursday, May. 28, 2009 03:52AM EDT
EnCana Corp. (ECA-T59.01-0.36-0.61%) says early drilling results indicate it is sitting on a potentially massive natural gas resource in the southern United States – one that's stacked on top of the already lucrative Haynesville shale of east Texas and western Louisiana.
EnCana said Wednesday it believes the so-called mid-Bossier shale could rival the size of the Haynesville reserve, which the U.S. Department of Energy has estimated contains 251 trillion cubic feet of recoverable natural gas. That's enough to supply the entire continent for 10 years, although only a fraction of technically recoverable gas is usually profitable to produce.
The bonus for EnCana is that the mid-Bossier and the Haynesville are what the industry calls a “stacked play.” Depending on location, the Haynesville shale lies between 3,200 and 4,100 metres below the surface. The mid-Bossier is 150 metres above it. Many wells drilled to obtain access to the Haynesville pass through the mid-Bossier.
Because the mid-Bossier did not initially show as much as promise as the Haynesville, and because of Louisiana land-retention regulations, companies have rushed to drill the deeper Haynesville first. As a result, the mid-Bossier itself has been largely ignored until now.
EnCana, however, has drilled several vertical wells and, in the past few months, a single horizontal well to test the mid-Bossier. It found gas that mirrored the quality and quantity of the Haynesville.
“The thickness and aerial extent are similar to the Haynesville, and we think the gas in place could rival – or is right there with – Haynesville,” Jeff Wojahn, president of EnCana's U.S. division, said in an interview Wednesday.
The company plans to drill three or four more mid-Bossier wells this year.
At least one analyst, however, criticized EnCana for drawing attention to a prospect that is very preliminary. “You can certainly make an argument that a company should wait a little while until they get more data before they come out and talk about it,” said Leo Mariani, an analyst with RBC Dominion Securities. “It's pretty early in the play,” he said. “And there really wasn't enough data to listen to what they say and be 100 per cent convinced.”
The promise of the mid-Bossier could be dampened by several factors, Mr. Mariani said. A single well could be an anomaly, and subsequent work could show poorer results. Or a well could also flow strongly at the beginning, but subsequently lose steam and produce a smaller amount of gas than originally estimated.
“At the end of the day, well results speak, and the more well results and the longer-term they are, that's how you get convinced the play is successful,” Mr. Mariani said.
A half-dozen shale plays such as the Haynesville have radically shifted the supply picture in North American natural gas, and helped to depress prices. Unconventional gas reserves, of which shales are a key component, now form 60 per cent of U.S. onshore recoverable resources, and shale gas production has more than tripled in the past three years.
Houston-based Petrohawk Energy Corp., which has 300,000 net acres in the Haynesville, said the mid-Bossier does not appear to be as large as the Haynesville. “It's not present where we do most of our drilling,” said Petrohawk vice-president of investor relations Joan Dunlap. The company is drilling its first mid-Bossier well and does not yet have results it can release.
EnCana owns 433,000 net acres in the Haynesville, which has shown enough promise that the company doubled its budget for the area to $580-million this year to do the work required to keep its land position.
Some analysts have estimated that Haynesville gas can be produced for $3.50 (U.S.) per 1,000 cubic feet, or slightly above the current trading range. The large, cheap supply has raised fears of a natural gas oversupply that could keep prices low for years to come.
EnCana, however, believes gas will return to between $6 and $8, based on the cost of producing gas from conventional wells.
New find could rival existing Haynesville shale, company says
Calgary — Globe and Mail Update, Thursday, May. 28, 2009 03:52AM EDT
EnCana Corp. (ECA-T59.01-0.36-0.61%) says early drilling results indicate it is sitting on a potentially massive natural gas resource in the southern United States – one that's stacked on top of the already lucrative Haynesville shale of east Texas and western Louisiana.
EnCana said Wednesday it believes the so-called mid-Bossier shale could rival the size of the Haynesville reserve, which the U.S. Department of Energy has estimated contains 251 trillion cubic feet of recoverable natural gas. That's enough to supply the entire continent for 10 years, although only a fraction of technically recoverable gas is usually profitable to produce.
The bonus for EnCana is that the mid-Bossier and the Haynesville are what the industry calls a “stacked play.” Depending on location, the Haynesville shale lies between 3,200 and 4,100 metres below the surface. The mid-Bossier is 150 metres above it. Many wells drilled to obtain access to the Haynesville pass through the mid-Bossier.
Because the mid-Bossier did not initially show as much as promise as the Haynesville, and because of Louisiana land-retention regulations, companies have rushed to drill the deeper Haynesville first. As a result, the mid-Bossier itself has been largely ignored until now.
EnCana, however, has drilled several vertical wells and, in the past few months, a single horizontal well to test the mid-Bossier. It found gas that mirrored the quality and quantity of the Haynesville.
“The thickness and aerial extent are similar to the Haynesville, and we think the gas in place could rival – or is right there with – Haynesville,” Jeff Wojahn, president of EnCana's U.S. division, said in an interview Wednesday.
The company plans to drill three or four more mid-Bossier wells this year.
At least one analyst, however, criticized EnCana for drawing attention to a prospect that is very preliminary. “You can certainly make an argument that a company should wait a little while until they get more data before they come out and talk about it,” said Leo Mariani, an analyst with RBC Dominion Securities. “It's pretty early in the play,” he said. “And there really wasn't enough data to listen to what they say and be 100 per cent convinced.”
The promise of the mid-Bossier could be dampened by several factors, Mr. Mariani said. A single well could be an anomaly, and subsequent work could show poorer results. Or a well could also flow strongly at the beginning, but subsequently lose steam and produce a smaller amount of gas than originally estimated.
“At the end of the day, well results speak, and the more well results and the longer-term they are, that's how you get convinced the play is successful,” Mr. Mariani said.
A half-dozen shale plays such as the Haynesville have radically shifted the supply picture in North American natural gas, and helped to depress prices. Unconventional gas reserves, of which shales are a key component, now form 60 per cent of U.S. onshore recoverable resources, and shale gas production has more than tripled in the past three years.
Houston-based Petrohawk Energy Corp., which has 300,000 net acres in the Haynesville, said the mid-Bossier does not appear to be as large as the Haynesville. “It's not present where we do most of our drilling,” said Petrohawk vice-president of investor relations Joan Dunlap. The company is drilling its first mid-Bossier well and does not yet have results it can release.
EnCana owns 433,000 net acres in the Haynesville, which has shown enough promise that the company doubled its budget for the area to $580-million this year to do the work required to keep its land position.
Some analysts have estimated that Haynesville gas can be produced for $3.50 (U.S.) per 1,000 cubic feet, or slightly above the current trading range. The large, cheap supply has raised fears of a natural gas oversupply that could keep prices low for years to come.
EnCana, however, believes gas will return to between $6 and $8, based on the cost of producing gas from conventional wells.
Views: 72
Replies to This Discussion
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Permalink Reply by JHH on
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I've read about the "Deep Bossier" over there in Robertson County and surrounding areas. Said to be the "motherload". But it's hard to believe anything... so you just take it all in...
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Permalink Reply by Les Bamburg on -
Intrepid, that is the Deep Bossier Sand play.
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Permalink Reply by Jaybird on
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I can't remember which conference call but I do remember Petrohawk stating on one of their conference calls that they were very pleased with what they were finding in the "Bossier" area that they were drilling. It was a while ago but I am sure someone else heard them talk about it.
Jaybird
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Permalink Reply by Les Bamburg on
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Jaybird, from 4th Qtr 2008 ConCall:
"Kim Pacanovsky - Collins Stewart Llc
Okay, great. And then, you're moving further south right now. I guess with that Timberlines well. What's the status on that well?
Richard Stoneburner
I think we're setting an intermediate, we're going to take a hard look at the bossier down there as well. I think that's something that we are very intrigued with, and have a pretty good handle on where we think it might be going. And sometime probably within the next quarter or two we'll test the bossier as well. But that well we'll be looking at both bossier and Haynesville over the course of the next couple of weeks.
Kim Pacanovsky - Collins Stewart Llc
Okay. So, you won't be completing that in the bossier, you're just going to take a look see at this point.
Richard Stoneburner
Probably just court (core it), evaluate it."
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Permalink Reply by Mattie on
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So, If Encana is bullish in the trend, how does this shake out with their partnership with SWEPI? All the negative news lately on Shell's shakeup doesn't sync up with Encana's enthusiasm. I'm curious how that relationship evolves over the next 12 months....with some acreage in the throws of expiration by 2010-11, it should be interesting.
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Permalink Reply by Les Bamburg on
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Mattie, maybe this is the reason EnCana is looking for partners for acreage in the far southern and Texas portions of the play.
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Permalink Reply by Bobi Carr ("parker") on
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They also mentioned that the Company sees the sweet spot moving south in the play (at least that's what they identify as the sweet spot is farther south than previously expected).
EnCana also talked about the business strategy for their operations in Haynesville. While it is still an emerging play, operators are in the second phase of their business strategies, having left the land rush phase. Now they are in the "Land Retention Strategy" phase, which means that they are going to judiciously select drill sites based on maintaining the best lease acreage. To realize the land retention strategy, EnCana is allocating an additional $290 million of capital to the Haynesville Shale. At the same time, EnCana is looking for partners to drill areas that might be less productive so the company can focus on the bigger payday. Not to say that the other leased areas are worthless - it's just that EnCana doesn't estimate them to be as valuable as leases in their sweet spot. But as the interpretation of the location of that sweet spot changes, the amount of land it is willing to offload is becoming smaller. Where it once intended to offload 134,000 acres, the number now seems to be about 30,000 acres. -
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Permalink Reply by Les Bamburg on
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Parker, the 300 represents 300 Bcf/section original gas in place rather than 300' thickness. Also this is far the Haynesville Shale only and would not include the Mid-Bossier Shale.
Note Slide 11 shows combined pay of 374 feet.
It was interesting to hear EnCana had dramatically reduced the 134,000 acres originally being shopped for new JV partner. -
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Permalink Reply by Bobi Carr ("parker") on
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Because the mid-Bossier did not initially show as much as promise as the Haynesville, and because of Louisiana land-retention regulations, companies have rushed to drill the deeper Haynesville first. As a result, the mid-Bossier itself has been largely ignored until now.
In other words, HBP down to the lowest depth and work your way up.
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Permalink Reply by Les Bamburg on
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Jay, EnCana has just said they project having all their acreage HBP by 2011. After that we will see if they wait on the Mid-Bossier or kick off a parallel development in the core area.
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The (who generally get it wrong) Times friday had a oil company report that the Bossier and Haynesville are comingled and can be produced as a single zone, one frac does it all, no second pay zone..........encana says zones independant seperated by about 450', a second pay zone.................The though of more jobs for productive people and real ecominic development expanded in our area, not just acorn jobs, is to much for the Times to handle.
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