Quicksilver, EnCana proceed with commercial CBM development

By OGJ editors

HOUSTON, Oct. 22 -- EnCana Corp., Calgary, and its joint venture partner MGV Energy Inc., the Calgary-based subsidiary of Quicksilver Resources Inc., Fort Worth, have begun commercial development drilling in the previously announced coalbed methane project on Palliser Block in southern Alberta (OGJ Online, Feb. 28, 2002). The action is predicated on test results from 100 exploration and pilot wells drilled to date.

"Based on the results of the extensive testing in the exploration and pilot phases, we are moving to the first CBM commercial development in Canadian history," said Mike Gatens, chairman and CEO of MGV Energy. "This project. . .is a major step for CBM production in Alberta," he added.

With three rigs drilling, the JV anticipates completing about 50 new wells by yearend. The remainder of the initial 250-well Palister development program will be completed in 2003, with follow-up programs also planned for next year.

Existing wells on Palliser Block have been tested for 30-180 days, and most currently are shut in awaiting connection to sales lines. The JV has 14 wells producing gas into sales lines on an extended test basis, up from 6 in February. Wells should produce 30-250 Mcfd of methane each, the company said.

The JV anticipates booking CBM reserves from the development program this year. Completion of the 2002 development drilling, along with the follow-up programs, will be required to fully determine reserves, but the JV anticipates proved reserves of 1-2 bcf/section. The 1 million acre Palliser Block has 300 sections, which represent about half of the JV's total acreage.

The area has low water production and an extensive existing gas infrastructure, Quicksilver said, that enable the JV to bring CBM production to market quickly.

Drilling and completion activities are ongoing on other previously announced CBM projects that involve NCE Petrofund Corp. properties and EnCana properties outside Palliser Block.

Three wells recently drilled on the NCE Petrofund properties have been completed and also are being tested. In addition, a new JV has been established to explore for CBM on Murphy Canada Exploration Ltd.'s lands in central Alberta this year.

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