EnCana expands coalbed methane development in Alberta

In this news release, EnCana announce an expansion of their coalbed methane program. Read closely, though.

Even though EnCana hold large tracts of coalbed methane potential in BC, they are NOT talking about BC here. Instead, they are talking about their “700,000 acres of 100 percent owned royalty-free lands in southern Alberta” Got that? ROYALTY FREE. Pretty hard for Richard Neufeld to compete with that, no matter how he slices and hacks at his giveaway royalty regimes.

The other key information in this announcement is that EnCana’s “100 percent owned fee lands contain a huge network of shallow gas wellbores, plants and pipelines, enabling us to dramatically lower the cost of tapping coalbed methane. We are tapping into coal seams with a combination of new and existing wells, then processing and transporting the added CBM production through existing facilities.” Got that? The infrastructure is already paid for and in place. You can’t beat that, Gordon Campbell, and when EnCana comes to you with their “You gotta sweeten the pot.”, just say no.

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EnCana expands coalbed methane development

Calgary, Alberta, (November 18, 2003) – EnCana is expanding coalbed methane (CBM) development on its 700,000 acres of 100 percent owned royalty-free lands in southern Alberta – resource play type properties that are estimated to contain more than 2 trillion cubic feet of recoverable natural gas resources from coal. Over the next five years, EnCana expects to increase natural gas production from coal seams to more than 200 million cubic feet per day.

“This CBM resource play, like our traditional shallow gas plays, covers great expanse and is estimated to hold multiple trillion cubic feet of recoverable natural gas. We have successfully demonstrated that our application of technology and large repeatable drilling programs can drive down development costs to achieve attractive financial returns. Typical of EnCana’s other large resource plays, CBM lands could potentially yield several hundred million cubic feet per day of long-life gas production,” said Randy Eresman, EnCana’s Chief Operating Officer.

EnCana’s CBM resources are integrated with the company’s widespread shallow gas developments. On its CBM lands east of Calgary, EnCana has extensive shallow gas processing facilities and gathering pipelines already in place, infrastructure that can be readily employed in CBM development.

“Our 100 percent owned fee lands contain a huge network of shallow gas wellbores, plants and pipelines, enabling us to dramatically lower the cost of tapping coalbed methane. We are tapping into coal seams with a combination of new and existing wells, then processing and transporting the added CBM production through existing facilities. Our CBM wells produce sweet natural gas with very little associated water production. This is a distinct competitive advantage that is expected to keep our costs the lowest in industry. CBM production is priced on the same basis as other natural gas and is expected to generate attractive netbacks and recycle ratios,” Eresman said.

This CBM development project builds on the success of EnCana’s demonstration project north of Strathmore, Alberta, where production is about 3 million cubic feet of gas per day from 35 wells. In the last half of 2003, EnCana has commenced the drilling of a 200-well program and expects to have about 100 of these wells on stream by year-end, taking CBM production to about 10 million cubic feet of gas per day.

“Within our southern Alberta fee lands, single CBM sections are estimated to contain an average of 2 billion cubic feet of recoverable natural gas resource, based on four to eight wells per section. We are drilling, completing and tying in these wells for about $250,000 each. We estimate total life-cycle finding and development costs of approximately $1.50 per thousand cubic feet of gas. The reservoir characteristics support long-term predictable anticipated gas production growth,” Eresman said. “In addition, and subject to regulatory approval, we intend on commingling our shallow gas and CBM production within existing well bores to minimize the number of new wells drilled.”

EnCana expects to drill another 300 wells in 2004, taking production to about 30 million cubic feet per day by year-end 2004. EnCana’s 2004 CBM program, an estimated $90 million investment, includes further appraisal drilling to identify future development opportunities within the company’s 700,000-acre prospective area.

Copyright 2003 EnCana – Legal Notice

www.encana.com

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