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Shale oil play emerges in Mackenzie Valley
A shale oil play is starting to emerge in the Mackenzie Plain and Franklin Mountains areas of the Central Mackenzie Valley in Canada's Northwest Territories.
Holding leases in the area are Husky Oil Operations Ltd., ConocoPhillips Canada Resources Corp., MGM Energy Corp., Shell Canada Resources Ltd., and Imperial Oil Resources Ventures Ltd. The leases lie generally from 60 km northwest to 180 km southeast of Norman Wells along the Enbridge pipeline that ships crude from giant Norman Wells oil field to Edson, Alta.
The drilling targets of the new play are the Canol-Hare Indian and Bluefish shales of Devonian age. MGM Energy said a geochemical review indicates that the shales are comparable to many of those being developed elsewhere in North America.
MGM Energy holds four parcels and has begun regulatory and operational planning for the drilling of a well in the 2012-13 winter targeting the shales.
MGM Energy said the Canol/Hare Indian is 30-170 m thick at 1,000-2,500 m and the Bluefish is 15-25 m thick at 1,000-2,700 m. Both are highly brittle with 70-80% quartz content and less than 5% clay. Total organic carbon is 4-25% in the Canol-Hare Indian and 2-9% in the Bluefish. The plays are expected to be liquids-dominant.
MGM Energy already held blocks in the area that it held at the time of its spinoff from Paramount Resources Corp., and it picked up three more parcels totaling 627,000 acres at a land sale last July.
Fayetteville shale gas output up as spending eases
Southwestern Energy Co., Houston, has drilled the backbone of its Fayetteville shale gas play in the eastern Arkoma basin and is phasing down capital spending in the play this year and in 2012, the company said.
Southwestern still calls the Fayetteville its "key project," in which it is drilling 130 wells/quarter and from which it produced 112 bcf in the quarter ended Sept. 30, up 21%. Net reserves are 4.3 tcf. The 2012 capital budget should be set in mid-December. The company has produced 320 bcf from the Fayetteville in the first 9 months of 2011 compared with 350 bcf in all of 2010.
The company placed 418 Fayetteville wells on production in the first 9 months, including 132 in the most recent quarter. It held 916,000 net acres at the end of 2010 across Conway, Van Buren, Faulkner, Cleburne, and White counties, Ark. Operated horizontal wells drilled in the third quarter averaged $2.8 million, 4,847 ft of lateral in the shale, 7.8 days of drilling time, and an initial rate of 3.4 MMcfd, up 14% from the second quarter. Southwestern has drilled 80 wells in 5 days or less so far.
The company has drilled on but not fully developed about 600,000 acres. On 160,000 acres of federal land it has drilled six wells and plans to drill five more in the next few months. It has cored but not tested the six wells. Another 150,000 acres in the established part of the play are held by production and can be drilled later.
Southwestern has 75% working interest and an inventory of 8,000 net (12,000 gross) locations left to drill on the 600,000 acres. The company assumes that gas prices will hold in the $4-5/Mcf range for the next few years and sees the bulk of the play as being commercial at its current profitability hurdle.
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