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: 85
Replies to This Discussion
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Permalink Reply by Les Bamburg on -
KB, EnCana has said they will focus there near term drilling in northern Red River Parish and De Soto Parish.
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Permalink Reply by Checkmateking on
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This makes sense as to where the mid-bossier would be good, Southern DeSoto, and Red River.
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Permalink Reply by Checkmateking on
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The Bossier in Texas is the Haynesville but called the Bossier if I understand correctly. And the Mid Bossier is a seperate and distinct formation producable in Southern Desoto and Red River. I could be wrong?
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Permalink Reply by Les Bamburg on
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ALongview, the entire shale interval consists of Upper Bossier, Mid-Bossier & Lower Bossier (Haynesville). The primary target is the Lower Bossier (Haynesville) with the Mid-Bossier being a potential target over a limited area in De Soto and Red River Parishes according to EnCana.
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Permalink Reply by Les Bamburg on
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KB, sorry but not following your "VERY deep" observation. Just realize the Deep Bossier is a sand play in Texas (TRRC District 5) and is completely separate from the Bossier Shale play.
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Permalink Reply by Les Bamburg on
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Jim, I assume you are referring to the following forum:
http://haynesvilleshale.ning.com/forum/topics/encana-presentation
The EnCana well that is producing Mid-Bossier Shale is the following and is producing from only 3 frac stages plus has a fish stuck in the well. EnCana said they plan to do a workover this week.
EnCana, Colbert Lands 16 #H1 Well, Serial #238108, S16-T13N-R9W -
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Permalink Reply by Les Bamburg on
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The article does not accurately reflect the statements made by EnCana. EnCana stated the Mid-Bossier Shale play could match the Haynesville Shale over EnCana's core acreage (Red River & De Soto Parishes) because it has similar gas in place. EnCana went on to say the Mid-Bossier Shale covered a larger geographic area but the thicker, higher-pressure portion was only present in EnCana's core region.
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Permalink Reply by Bacon on
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Wonder if they would form a separate Bossier unit or lump it in to HA or CV? Does it up show on any of the logs in NW Red River? Thanks.
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Permalink Reply by Les Bamburg on
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Bacon, the Haynesville Zone units appear to include the Bossier Shale interval so no need to form new units. EnCana indicated parallel development which would imply separate horizontal wells drilled to the Mid-Bossier Shale.
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