Storm sizes up Horn River basin shale potential

By OGJ editors
HOUSTON, May 12 -- Storm Exploration Inc., Calgary, said its undeveloped land position in the Horn River basin in Northeast British Columbia is prospective for Devonian shale gas in the Muskwa, Otter Park, and Evie/Klua formations.

The position includes 87 gross sections at a 40% working interest (22,850 net acres) in which its affiliate Storm Gas Resource Corp. owns the other 60% working interest.

Storm has identified a central project area of 35 gross sections (14 net to Storm) that contains an estimated 2.6 tcf of gross discovered petroleum initially in place in the Muskwa and Otter Park shales, according to an internal estimate prepared by Storm management.

The Evie/Klua shale interval was not included in the estimate because less information is available regarding the productivity of this shale in the area. Storm’s initial efforts are directed towards proving commerciality of the Muskwa and Otter Park shales in the central project area.

The second vertical well, Storm Gas Resource 60% and Storm Exploration 40%, which had been drilled the previous winter, was completed and tested in the quarter ended Mar. 31. In addition, 60 sq km of 3D seismic was recorded across the southern half of the central project area and 8 km of high-grade gravel roads plus two drilling pads were constructed.

Drilling of the third vertical delineation well, which had been planned for the first quarter, was deferred due to difficulties in sourcing a drilling rig and the early start to spring break-up.

Storm anticipates drilling one horizontal well this summer and completing it this fall at an estimated cost of $4 million plus $10 million for completion with 12 frac stages. A pad for a second horizontal location has also been constructed with drilling and completion being contingent on reviewing results from the first horizontal well. First gas sales from successful horizontal wells is possible in early 2011.

Storm expects to invest $12 million net to its 40% working interest in 2010 to advance the project towards commerciality. It is likely to be mid-2011 before enough production data will be available from horizontal wells to form an opinion as to the commerciality of the shales on company lands.