Devon sees unconventional gas plays gaining momentum

Paula Dittrick
Senior Staff Writer

HOUSTON, Dec. 28 -- Higher natural gas prices and advances in technology are making the economics of producing unconventional gas more attractive, said William A. Van Wie, Devon Energy Corp. vice-president and general manager.

Unconventional gas fields can prove prolific, and Devon is pursuing opportunities in basins in the US and Canada from tight sands, shales, coalbed methane, and oil sands, he said.

The Barnett shale is helping stabilize the North American gas picture," Van Wie said of the North Texas gas play during a Dec. 20 luncheon speech sponsored by the Houston Planning Forum, the University of Houston Global Energy Management Institute, and the Houston Technology Center.

The Barnett Shale is the state's busiest play in terms of rigs running and number of wells being drilled.

Recent developments include 20-acre well spacing in parts of Barnett Shale as well as the development of elaborate horizontal well systems, he said. Devon is refracing some of the original wells. In addition, the company uses microseismic mapping to track its fracturing jobs and to determine what kind of rock it's accessing.

Devon bought Mitchell Energy & Development Corp. in January 2002. The acquisition included Barnett Shale assets. Devon now has more than 2,000 producing wells in the formation, and has 18-20 rigs running in the play. Van Wie said Devon sees plenty of future opportunities there.

The Oklahoma City independent reports that 85% of its total production comes from the US and Canada. Independents always have dominated the Barnett Shale, but Royal Dutch Shell PLC bought the leasing rights to 25,000 acres of the Barnett Shale in August 2005.

"It's tough for the majors," to acquire acreage in the mainland US now without buying an entire company, Van Wie said. He noted that BP PLC and ExxonMobil Corp. kept "massive acreage holdings" in the US and Canada while looking for reserves elsewhere.

Other promising areas
Devon's strategy is twofold. It traditionally has grown through a series of mergers and acquisitions, and it also worked to obtaining interests in high-impact projects that promise future development opportunities, Van Wie said.

Van Wie is optimistic about the opportunities for the Jurassic Cotton Valley (Bossier) gas fields of North Louisiana. Devon has 55% interest in a wildcat being drilled in East Vernon field, he said. Devon is a partner with Anadarko Petroleum Corp. in that play.

In Oklahoma, Vie Wie is optimistic about the potential of the Caney Shale and Woodford Shale as well as Granite Wash tight gas in Anadarko basin. He also said there a number of promising unconventional gas plays in the Rocky Mountain region.

In Alberta, Devon is developing the Jackfish project 87 miles south of Fort McMurray. Steam-assisted gravity drainage will be used to extract 35,000 b/d of bitumen over the life of the project. Total recoverable reserves are estimated at over 300 million bbl.

Construction began in the first quarter of 2005 with full production targeted for 2008.

Contact Paula Dittrick at Paulad@ogjonline.com.

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