UTAH'S CANE CREEK HORIZONTAL PLAY EXPANDING

Robin Buckner Price
Staff Writer

One of the hottest new U.S. horizontal plays continues to gather steam in southern Utah.

And because it is expanding in an environmentally sensitive area, development is being watched closely by the Bureau of Land Management and environmental groups.

One operator planning a wildcat in the vicinity has been forced to postpone drilling for environmental reasons.

In spite of some opposition to drilling in the area, the play accounted for a large portion of more than $1 million in bonuses generated at a lease sale early last June.

CANE CREEK FLURRY

Columbia Gas Development Corp., which kicked off the play, is drilling ahead at its second horizontal Pennsylvanian Cane Creek test on the northern flank of the Paradox basin in Grand County, Dwights Energydata Inc. reports.

The 19-1 Kane Springs Federal, 19-26s-20e, is 6 miles southeast of Columbia's 27-1 Kane Springs Federal well that reopened the abandoned, one well Bartlett Flat field flowing 914 b/d of oil and 290 Mcfd of gas from Cane Creek at 7,510-8,244 ft (OGJ, Apr. 22, p. 36).

As of July 29, Columbia had plans for five more horizontal Cane Creek tests in the Kane Springs Federal Exploratory Unit, which covers more than 45,000 acres.

The most recent location is for the 36-1 Kane Springs-State, to be drilled horizontally in 36-25s-19e.

Proposed measured depth is 10,370 ft, true vertical depth 7,602 ft. The wildcat is 2 miles southeast of the 27-1 producer.

Columbia's 28-1 location is 1 mile west of Bartlett Flat field, and its 10-1 wildcat is in 10-25s-18e, about 7 miles northwest of the field.

Columbia has staked its 14-1 well in 14-26s-19e in the abandoned Big Flat field, which was discovered in 1957 and produced less than 83,000 bbl of oil from Mississippian Leadeville, Petroleum Information reports. Site is about 5 miles southeast of Columbia's producer.

The 20-1 wildcat is 31/2 miles west of Big Flat field and about 6 miles southwest of Bartlett Flat field.

EXPANDING PLAY

Meantime, Chevron USA Inc. plans four horizontal Cane Creek tests, Meridian Oil Inc., Houston, is drilling one and has another staked, while Giant Exploration & Production Co., Farmington, N.M., plans one wildcat.

Meridian is drilling ahead at its 22-33H wildcat in 33-27s-21e, San Juan County, about 17 miles southeast of Columbia's producer and 11/2 miles southwest of abandoned Cane Creek production in Lion Mesa field. The field opener, in 27-27s-21e, produced about 1,700 bbl of oil from pay at 7,389-7,450 ft before being shut in, PI reported.

Meridian staked its 33-4H wildcat in 20-25s-18e, Grand County, 21/2 miles southwest of Columbia's Cane Creek well and 3 miles northwest of Big Flat field.

Chevron plans to drill its 120 wildcat in 20-25s-18e, 8 miles west of Bartlett Flat field, Grand County.

Its 1-36 exploratory well is to be in 36-27s-20e in San Juan County, 4 miles west-southwest of Lion Mesa field and 15 miles southeast of Columbia's producer.

Moving a little northwest of the hotspot, Chevron picked 12-24s-17e for its 1-12 horizontal Cane Creek test and is going far south of the main play with its 1-27 well in 27-31s-22e, about 41 miles southeast of Bartlett Flat field.

Giant's wildcat location in 14-29s-21e, San Juan County, also is south of the action, nearly 30 miles southeast of Columbia's 27-1 well.

OPPOSITION

Despite the play developing just 10 miles from Dead Horse Point State Park and just as close to Canyonlands and Arches national parks, BLM has approved three wells, a move spurring opposition from the Southern Utah Wilderness Alliance (SUWA) environmental group.

SUWA and other environmental groups demand that oil and gas activity in the area be halted and an environmental impact statement be prepared.

Bill Stringer, BLM's assistant district manager of minerals, told PI the required environmental reviews, including a resource management plan and an EIS covering 1.8 million acres in the area, were completed in 1985.

A supplemental environmental analysis was prepared in 1988. Based on that report, BLM determined the area around Columbia's discovery could support as many as 10 wells by 1995. Beyond that, BLM concedes, further environmental studies will need to be conducted, and money for that will come from the companies operating in the area.

BLM's Lynn Jackson, district head of oil and gas operations, said geology in the area is very complex and the reservoir's extent is not defined.

And, he said, there are two major obstacles with these wells. First, to drill the Cane Creek horizontally, the well must be deviated within a salt zone. Second, keeping the wells producing is a problem because salt tends to plug them.

Columbia at least has overcome the first obstacle, but its Cane Creek well hasn't been producing long enough to evaluate its ability to sustain production.

Jackson noted the BLM would hesitate to stop all drilling activity for an EIS at this point, just to discover the wells can't sustain production and thus killing interest in the play in any event.

COORS POSTPONES DRILLING

Coors Energy Co., Golden, Colo., was forced last month to halt operations at the site of its 1-13 wildcat in 13-25s-20e, about 8 miles east of Columbia's producer.

Unusual for the area, the well was planned as a vertical hole. However, BLM's Jackson noted the reservoir dips so steeply at the location, the effect will be the same as if it were drilled horizontally.

Coors, which had begun building a pad and road at the site, pulled its crews and equipment in late June after being served a temporary restraining order issued by the federal district court in Salt Lake City in response to Sierra Club and SUWA arguments that the wildcat, near Arches National Park, would harm a flock of bighorn sheep.

Meantime, the company is under a mid-June to mid-August drilling window stipulated in a previous environmental assessment.

BLM will extend Coors' leases, which were to expire in September, and hold its drilling permit while more environmental studies are conducted in the area. The two environmental groups have filed suit in federal court to force BLM to prepare an EIS rather than the less comprehensive environmental assessment.

As of early last week Coors was preparing to present evidence supporting its project at a hearing in Salt Lake City. A ruling is expected in August.

Coors told PI it wants to resume operations early next year but expects it will be later because of the added environmental studies.

LEASE SALE

Operators apparently are undaunted by the opposition, judging from the response to a June 3 oil and gas lease sale by BLM in Salt Lake City.

The sale generated more than $1 million in bonuses, almost 60% of which was generated by leases in the play between Moab and Monticello.

PI reports William Peterson, Ogden, Utah, paid $200/acre for a 178.99 acre lease in 4-28s-21e, San Juan County, the highest per acre bid. Overall, the average price at the sale was $18.98/acre.

In all, 26 tracts in the northern Paradox basin area drew bids totaling $595,359, PI reported.

EP Operating Co., Dallas, was high bidder on four parcels covering 4,144.74 acres, all within 6 miles of Columbia's producer in Grand County. EP paid an average $60.94/acre for the leases.

Giant continues to step out south of the play and was successful bidder on a remote 640 acre tract 23 miles south of Moab in San Juan County it acquired for $55/acre.

LCM Ltd., Denver, acquired a 2,039.12 acre lease in San Juan County, 16 miles northwest of Monticello, paying $57.50/acre.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.