Rapid development progress at giant Pinedale and Jonah gas fields in Southwest Wyoming is evident in the year-end financial and operating figures of Ultra Petroleum Corp., Houston.
The two Green River basin fields rank among the top six US gas fields by reserves, said Michael D. Watford, Ultra chairman, president, and chief executive officer.
EnCana Corp. and BP PLC have the two largest positions in Jonah, and Ultra is third. Jonah field, with 1,000 wells on 36 sq miles, has an estimated 13.6 tcf in place, of which EnCana estimates slightly more than 60% will be recovered, Watford said.
Pinedale, where Ultra has the largest land position, covers 90 sq miles and began to develop 4-5 years after Jonah. Pinedale has 48 tcf of OGIP, and EnCana suggests 57% recovery there. Pinedale is only 8% developed.
Each field is producing more than 1 bcfd of gas.
Ultra in 2008 looks forward to more year-round field access at Pinedale and plans to accelerate delineation drilling, continue development drilling, work on a downspaced 5-acre pilot, evaluate nonsand pay projects to add incremental reserves, and explore deeper formations, Watford said.
The company, envigorated by start-up of the Rockies Express pipeline to the eastern US, will nearly double in 2008 the number of Pinedale delineation wells it drilled in 2007.
Ultra is the only entity with production in both fields, Watford said, but Newfield Exploration Co., Houston, is now drilling in both.
2008 status
Ultra’s board in late February approved a 2008 capital budget of $755 million, up from the $714.5 million spent in 2007.
The company forecasts that its production, which comes from Pinedale and Jonah, will total 135-140 bcfe this year compared with 114 bcfe in 2007. Its forecast is for production of 170-175 bcfe in 2009 and a preliminary 200-205 bcfe in 2010.
It plans to drill 26 delineation wells in 2008 as part of a 5-year, 120-well delineation program.
Ultra’s yearend 2007 proved reserves were 2.98 tcf of gas equivalent, up 25% on the year.
“More importantly,” the company said, “the third party identified, engineered, and economic resource base net to Ultra in Wyoming has grown from 9.9 tcfe to 10.7 tcfe, well on our way to the 12 tcfe target.”
The company identified 5,300 undrilled locations at the end of 2007, up 650 from a year earlier.
Ultra calculated its 2007 finding and development costs at 98¢/Mcf, down from $1.10 in 2006. The $4.66/Mcf realized gas price in 2007 was a 22% decline from 2006, but Ultra’s net income margin from continuing operations was 32% and its return on capital 27%. The company sold its China Bohai Bay interests, which did not contribute to fourth quarter 2007 production.
Ultra’s fourth quarter production totaled 32 bcf of gas and 255,300 bbl of condensate. Fourth quarter condensate price was $79.84/bbl in 2007 and $57.06/bbl in 2006.
Field operations
Ultra-interest Pinedale completions in 2007 averaged initial flow rates of 8.8 MMcfd with a maximum of 20.8 MMcfd from Upper Cretaceous Lance, Watford said.
The formation averages 1,400 ft of net pay in a 5,600-5,700-ft gross interval.
After 20-25 large fracs at $100,000/stage, the typical well comes on at a high rate, produces 20% of estimated ultimate recovery in the first 2 years, declines rapidly for 2-3 years, and then flattens for an expected 40-50-year producing life.
Ultra drilled 212 gross (105 net) wells in 2007. Its Pinedale drilling averaged 35 days/well from spud to total depth, compared with 61 days in 2006.
It drilled the Warbonnet 4D1-9 well from spud to TD 13,175 ft in 17.5 days, surpassing the previous 18.6-day record, and drilled 75% of the 2007 Pinedale wells in 40 days or less. Before 2007, 41 days was the record.
Ultra attributed the improvement to the use of oil base mud, new drillbit technology, and rig fleet upgrades.
The company placed on production 193 gross (90 net) wells in 2007 vs. 124 (57) in 2006 in Wyoming.
Delineating Pinedale
Ultra had 11 operated rigs and another 12 nonoperated rigs running at Pinedale at the end of 2007. Five rigs are on delineation wells, and the company has identified 100 quarter sections for delineation drilling at Pinedale.
“Current plans call for continuing the delineation drilling effort for at least the next 5 years in ongoing efforts to fully define the ultimate potential of this gigantic asset,” the company said.
Ultra said 13 of the planned 17 delineation wells for 2007 had sufficient production history by late February 2008 to estimate reserves. For those 13 wells, reserves averaged 31% better than the 2006 yearend reserve estimates by consulting engineers. Early 2008 delineation results continued to show great success, the company added.
Consulting engineers assigned Boulder 9B1-19, a delineation well in east-central Pinedale, 8.6 bcfe of EUR after it came on at 11.6 MMcfd. Farther south, Boulder 10D-32 came on at 11.9 MMcfd and was assigned 6.8 bcfe of EUR.
“The combination of these wells on the east side of Pinedale expands Ultra’s reserve mapping and removes the area previously known as the ‘Boulder Gap,’” the company said.
Meanwhile, Riverside 10C1-25 on Pinedale’s western edge came on at 9.8 MMcfd.
Nonsand and deep work
Ultra said its program to return to older Pinedale wells to stimulate and complete nonsand intervals, although still early, indicates that the bypassed pays “appear to add materially to the overall reserves and production at only the additional cost of the extra frac jobs.”
It may take 18-24 months to understand how much more reserves are being added, Watford said. Early results indicate the cost to be about $1/Mcf.
By late February, Ultra had completed 19 wells in nonsand intervals and run production logs of 12 of them.
“These production logs indicate that the flow rates from the 63 additional frac stages pumped in this test have averaged over 100 Mcfd/stage,” Ultra said.
On 8 of the 12 logged wells, a second production log confirmed that the nonsand stages are performing similarly to typical Lance sand intervals.
Separately, the Ultra and Shell Western E&P Mesa 10D-33 exploration well in central Pinedale was drilling at 17,878 ft in the Blair in late February after topping Blair at 16,204 ft. It is expected to TD at 19,500 ft by early March.
The Blair section appears to contain a large thickness of potential pay sand with better porosity than encountered at the Questar Corp. Stewart Point 15-29 well (OGJ, Dec. 4, 2006, p. 35). That well proved gas in the Cretaceous Blair and Hilliard shales, Watford noted, but had mechanical problems and was completed uphole in the Lance.
Land and pipelines
Pipeline capacity and land access both appear to be opening up at Pinedale field.
With start-up of the Rockies Express pipeline in early 2008, Ultra is “getting the best gas prices we ever received in the Rockies, well above $7,” Watford said.
Rockies Express is important to Ultra, an anchor shipper, because it enables the company to deliver gas east of the Rocky Mountains for the first time. Within weeks, the pipeline will become fully operational from Opal, Wyo., to a connection with Panhandle Eastern Pipeline near Columbia in Audrain County, Mo.
Not long ago, the northern Rockies had 6.6 bcfd of takeaway capacity. Rockies Express added 1.5 bcfd and will expand to 1.8 bcfd. Several other systems are planned, perhaps led by El Paso Corp.’s 1.2 bcfd Ruby pipeline to northern California, and another pipeline of similar size to Chicago is under discussion.
A final environmental impact statement regarding Pinedale, expected in the second half of 2008, is likely to authorize year-round access to drill and complete wells in most parts of the field while still leaving some large areas for wildlife migration, Watford noted.
The EIS envisions as many as 40-45 rigs operating at Pinedale, compared with the 28 working today, he said.
