EnCana Corp., Calgary, is placing strong emphasis on so-called basin-centered or nonconventional resource plays in North America.
EnCana said, "The proportion of the company's North American production sourced from long-life, low-decline resource plays is expected to climb from 60 to 70% during 2004."
The company in mid-June added $850 million to its 2004 capital spending, initially $3.7-4 billion, with $270 million of the increase earmarked for development on lands acquired from Tom Brown Inc., Denver, in the Green River, Wind River, and other Rocky Mountain basins.
Most of the rest will go to North American core regions, "split about evenly between Canadian Plains, Canadian Foothills and Frontier, and the USA region," EnCana said. EnCana reports in US dollars. The company expects to have drilled 5,500 net wells in 2004, of which it has already drilled more than 2,200. It listed its production in mid-June as 3.1 bcfd of gas and 260,000 b/d of oil and NGLs.
"Natural gas production in the US Rockies is up more than 25% in the past year before the inclusion of the Tom Brown production," and western Canada gas production is up about 14%. In situ oil sands production is up about 35% in the past year.
Reserves, resources
EnCana, in addition to listing its reserves, has begun to report the company's "unbooked resource potential," on which it recently completed a study.
EnCana's proved reserves grew 12% in 2003 to 8.4 tcf of natural gas and 957 million bbl of oil and NGLs.
The company defined unbooked resource potential as "the estimated quantities of hydrocarbons that may be added to proved reserves over a specified period of time from a specified resource play or plays."
It expects to convert its unbooked resource potential, now estimated at 16 tcf of gas and 850 million bbl of oil and NGLs, into proved reserves in the next 5 years.
The current unbooked resource potential figures are 70% higher for gas and 40% higher for oil and NGLs than they were in June 2003, EnCana said.
The volumes include increased potential in existing lands plus properties added in the past year, the acquisition of Cutbank Ridge in Northeast British Columbia and Tom Brown in the US, plus updated estimates of resource potential from EnCana's assets in the Canadian in situ oil sands.
EnCana is selling noncore conventional Canadian properties that produce about 35,000 boed.
'Manufacturing' gas
EnCana entered the US Rockies 5 years ago "because the area has the highest concentration of basin centered resource plays in the US," EnCana president and chief executive officer Gwyn Morgan told the Howard Weil energy conference at the end of March.
All of the company's US production comes from those properties, principally Jonah field in the Green River basin acquired from Williams Cos. Inc., Tulsa, and Mamm Creek field in the Piceance basin acquired from El Paso Corp., Houston.
EnCana "doesn't have to find anything to add reserves," Morgan noted. It just manufactures reserves from the basin-centered plays in which it has established large acreage positions.
The company includes in its descriptions of resource plays shallow gas, including coalbed methane, thermal oil recovery by steam-assisted gravity drainage thermal, horizontal underbalanced gas drilling, and exploitation of tight gas formations.
