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Permalink Reply by mary on October 16, 2008 at 10:46

Please comment on recent applications to the Commissioner of Conservation office requesting permission to increase the size of drilling units from 640 acres to over 900 acres. This is concerning to owners of mineral rights.

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Permalink Reply by Grillin' - MmmMmm on October 16, 2008 at 4:23

Current thinking is that EVENTUALLY this will get drilled on 80-acre spacing...thus 8 wells per 640 acre unit. However, with the slowdown in the industry, I would envision one well drilled on the 640 unit and then the companies will move on to other units, such that all of their acreage is HBP. That way they have no time deadline to drill on and they can space out their drilling over years, and maximizing the efficiency of pad drilling, learning curves, etc.

Also, the 80-acre spacing will evolve. With horizontal wells, the 80-acre spacing is kind of a hybrid since the old spacing definitions were based on vertical wells. But there is an equivalent spacing with horizontal wells that gets close to 80-acres.

Also, in the Barnett the spacing started much higher and then they started infilling the horizontal wells. EOG is working on pilots at 40 acre spacing and is even considering some lower than that, although as a reservoir engineer, I'm starting to doubt that idea. With the number of frac's being used per horizontal well, I think they would not need to go below an equivalent 40-acre spacing, maybe even 80-acre.

But again, full development will take a long time. Newfield drilled their Woodford shale on 640 spacing so that they could get all of their acreage HBP. That took a couple of years. And it will take several more to go back and infill. Just a way to manage leases and ensure you don't have to pay bonuses twice.

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Permalink Reply by twomule on October 16, 2008 at 10:50

Reading CHK's investor presentation on the website;

I found it interesting on around page 11 they are wanting to use 'Superpads" in the Haynesville Shale, meaning one large pad per section (640 acres) and all 8 wells on one pad. Its much more economic, and will obviously increase the profits for CHK and the share holders. I'm curious on how they do this, can anyone enlighten me?

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Permalink Reply by Grillin' - MmmMmm on October 17, 2008 at 6:19

Go to their investor's web page and look at the Investor Presentation #2 dated Oct 14 (actually presented on the 15th/16th. They have some slides in there regarding superpads. Be careful, the link is 35 MB and 141 slides long.

What they are doing is putting the superpad ON THE SECTION line and drilling the wells into the 2 adjoing sections. That gives them maximum coverage for the least amount of surface disruption. Something done in other places for many years...alaska, venezuela, etc.

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Permalink Reply by Grillin' - MmmMmm on October 17, 2008 at 6:20

Jim Krow beat me to it! There were folks talking about 10 acre spacing (Exco I believe) but that is way too tight. 20's are doing a good bit of acceleration, 10's would be all acceleration, not new reserves/recovery.

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Permalink Reply by VSC DeSoto South on October 19, 2008 at 7:55

Good information.
Ignoring lots of variables like the total slowdown of the economy, regulatory obstacles old and new, price of nat gas, availability of equipment, availablity of people, etc, a timeline might be 2-3 years to get one well in to hold by production, then 2-5 years to come back and fill in.
Would be this be a reasonable hypotheical timeline or could it be shorter than this? (I personally would like it to be.)
Will all operators use 80 acre spacing or does each select their own?

Valerie

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