EnCana sees 4 tcf recoverable at Cutbank Ridge, western Canada

By OGJ editors
HOUSTON, Sept. 23 -- EnCana Corp., Calgary, said it acquired 500,000 net acres in the Alberta-British Columbia foothills in a play from which it expects to recover more than 4 tcf of gas.

The company spent $500 million the past year on drilling and land purchases, examined 300 well logs, and drilled 25 wells to establish production profiles. The play, known as Cutbank Ridge, is expected to support production of several hundred million cubic feet per day of long-lived gas production from the Lower Cretaceous Cadomin formation, the company said.

A preliminary development plan calls for the drilling of 100-200 wells/year.

The play is centered about 50 km southwest of Dawson Creek, BC. EnCana acquired 150,000 net acres the past 18 months via purchases, land swaps with other companies, and Crown land sales. It paid $369 million at recent provincial land sales for majority interest in 350,000 net acres.

EnCana described the play as gas in continuous (basin centered), tight sandstone reservoirs extensively delineated by previous industry drilling. It said technological advances in drilling and completion techniques have made the play economic and that the reservoir characteristics support long-term, predictable gas production growth.

Cutbank Ridge is expected to yield more than 6 bcf/section based on two horizontal wells per section. Costs are placed at $4 million/well for drilling, completion, sales tie-in, and facilities. Cadomin is about 100 ft thick and 8,000 ft deep.

EnCana anticipates Cadomin steep first-year production declines followed by declines that average less than 15%/year for years thereafter.

Randy Eresman, EnCana chief operating officer, said, "We estimate full-cycle finding and development costs of approximately $1.50 per thousand cubic feet of gas."

EnCana said Cutbank Ridge is similar to its attractive gas development projects in Greater Sierra, northeast British Columbia, in the Upper Devonian Jean Marie formation (see map, OGJ, June 24, 2002, p. 38) and Mamm Creek field, Colorado, in the Cretaceous Mesaverde formation (OGJ, Dec. 10, 2001, p. 44).

The company said it stepped up its investment in BC to more than $1 billion this year from $700 million as a "clear endorsement of the progressive steps taken by the BC government to provide the conditions required to attract these huge capital commitments. In Greater Sierra, we have increased our summer drilling to 80 wells-double our initial plan."

The company commended the government for "improving the investment climate through targeted royalties, upgrading of roads, the adoption of summer drilling incentives, enhanced tax competitiveness and streamlined regulatory processes."

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