Chesapeake unconventional gas stake deep

Chesapeake Energy Corp., Oklahoma City, reported an 11% increase in proved reserves to 12.1 tcf of gas equivalent in 2008 and detailed the depth of the company’s commitment to US unconventional gas.

Chesapeake, which is operating 112 drilling rigs in the US, replaced 239% of its 2008 production.

The company said it has leading positions in the four largest US shale gas plays—Haynesville, Marcellus, Barnett, and Fayetteville—in which it holds 2.44 million net acres and is producing a combined 870 MMcfd of gas.

Further, Chesapeake holds 8.16 million net acres in other unspecified unconventional plays, from which it is producing 780 MMcfd.

The company drilled 1,819 gross operated wells, 1,491 net wells with an 82% average working interest, in 2008 and participated in another 1,857 wells operated by other companies with 13% average working interest.

Since 2000, Chesapeake has acquired $12.6 billion in acreage and 3D seismic and owns the largest combined inventories of onshore leasehold at 15.2 million net acres and 3D seismic at 21.6 million acres in the US.

The company plans to direct 75% of its gross drilling capital expenditure in 2009-10 to the four main shale plays.

Chesapeake plans to average 26 rigs in the Haynesville in 2009 to develop its 460,000 net acres, and its joint venture partner Plains Exploration & Production Co. will pay 50% or $975 million of Chesapeake’s drilling costs in 2009-10 in the play. Chesapeake estimates reaching 300 MMcfd net from the Haynesville at the end of 2009 compared with 70 MMcfd at present.

Chesapeake plans to greatly accelerate Marcellus shale drilling in 2009-10. It will average 14 rigs in 2009 to further develop its 1.25 million net acres, the play’s largest holding. The company expects to end 2009 as the play’s most active driller and largest gas producer. It is in joint venture there with StatoilHydro, which will carry 75% or $650 million of Chesapeake’s drilling costs in 2009-10.

Chesapeake expects to reach a net 725 MMcfed from the North Texas Barnett shale play by the end of 2009 compared with 610 Mmcfed at present, the play’s second largest, and 570 MMcfed in the last quarter of 2008.

Chesapeake will average 25 rigs in 2009 to further develop its 310,000 net acres in the Barnett, where it is discussing joint ventures with several large international energy companies.

The company plans to exit 2009 producing a net 235 MMcfed from the Fayetteville shale in Arkansas, where at 420,000 net acres it is the second largest lease owner in the core and top tier areas of the play. Current net output is 180 MMcfed.

Chesapeake expects to average 20 rigs in 2009, when its partner BP PLC will pick up $535 million or nearly all of its drilling costs.

Niko Resources Ltd., Calgary, began shooting seismic on the 846 sq km Qara Dagh block southeast of Sulaymaniya in Iraqi Kurdistan, said partner Vast Exploration Inc., Calgary.

The 4-5 month program is for a minimum of 350 line-km of 2D seismic using a combination of vibrator and dynamite sources. It could be extended to 390 line-km if more data are required.

The ministry of water and mineral resources in Hargeisa launched Somaliland’s first hydrocarbon bid round on Feb. 19, 2009.

On offer are eight land and offshore blocks totaling more than 89,624 sq km.

The ministry noted striking geological similarities between Yemen’s Balhaf graben basin and Somaliland’s Berbera basin. Other indicators of hydrocarbon potential are oil and gas seeps at Dagah Shabel, and most historical wells in the area contain multiple zones with shows.

In preparation for the round, TGS-NOPEC Geophysical Co. ASA shot 5,300 line-km of seismic, gravity, and magnetic data offshore and 34,700 line-km of high resolution aeromagnetic data over all known petroleum basins. This is the first new geophysical data acquired in almost 30 years.

Bids are due Aug. 15, and concessions are to be awarded on Dec. 15, 2009.

MGM Energy Corp., Calgary, is moving to drill the Ellice A-25 well after reporting a dry hole at its North Ellice J-17 well and better than expected test results from the Ellice J-27 discovery in Canada’s western Mackenzie Delta.

North Ellice J-17 found poor quality reservoir sections in Eocene Taglu, and no hydrocarbons were present. Ellice A-25 will test a prospect on the Ellice Island anticline.

Ellice J-27’s second test, in Taglu at 1,369-73 m MD, flowed at a maximum restricted 22.4 MMcfd on a 1.75-in. choke at 8,218 kPa flowing tubing pressure with 16% calculated drawdown. CAOF is 81 MMcfd. The zone had 9 m of net pay with 22% average porosity and 33% average water saturation using a 10% porosity cutoff.

On the previously reported first test, J-27 flowed at a maximum restricted 38.2 MMcfd on a 1.5-in. choke. CAOF is 314 MMcfd.

Noble Energy Inc. said it is acquiring more seismic and preparing to appraise its Gunflint oil discovery in Mississippi Canyon Block 948 in the Gulf of Mexico.

Drilled to 29,280 ft in 6,100 ft of water, Gunflint cut more than 550 ft of net pay, twice as thick as expected, in a Miocene subsalt fourway closure in October 2008. The company’s largest discovery to date in the gulf, it is four blocks south of the Kodiak and Devil’s Tower discoveries.

After BP PLC operated the discovery well, Noble Energy became operator with 37.5% interest. BP and Samson Offshore have 25%, and Marathon Oil Corp. has 12.5%.