Cabot's Walen: US sweet-gas plays remain attractive

Nov. 12, 2002
Michael B. Walen, senior vice-president, E&P, Cabot Oil & Gas Corp.
"In 1997, Cabot had one workstation and 100 sq miles of 3D seismic. Now every geoscientist has a workstation, and Cabot has about 10,000 sq miles of 3D data."

Guntis Moritis
Production Editor

Michael B. Walen over the last several years has helped to transform Cabot Oil & Gas Corp., Houston, from a low-risk development driller to a growth-oriented exploration company with an emphasis on the Gulf Coast and Rocky Mountains, primarily in sweet-gas plays.

At Cabot one change has been the increased use of 3D seismic and workstations to evaluate prospects. For instance, "In 1997, Cabot had one workstation and 100 sq miles of 3D seismic," Walen said. "Now every geoscientist has a workstation, and Cabot has about 10,000 sq miles of 3D data."

Cabot Oil & Gas
Cabot Oil & Gas Corp. was organized in 1989 as the successor to the oil and gas business of Cabot Corp., founded in 1891. Cabot Oil & Gas employs about 360 people. It has regional offices in Denver, Colo. and Charleston, W.Va.

The company has drilling, production, storage, gathering, pipeline, and marketing operations in the eastern US, and drilling, production, and marketing activities in the US West and Gulf Coast regions.

Natural gas represents about 90% of the company's reserves. It has interests in 4,598 producing wells, of which 82.3% are operated by Cabot.

At yearend 2001, its reserves were 1.15 tcfe, and it held 1.1 million net developed acres and 0.6 million net undeveloped acres.

During 2001, the company drilled 208 gross wells (153.6 net) with an 87% success rate. Net production in 2001 for the company averaged 222.3 MMcfde.

Eastern operations
Walen said that, in the Appalachians, Cabot drills and completes mostly vertical gas wells, typically to 2,500-5,500 ft. These wells have 4 1/2-in. casing, and most wells are hydraulically fractured.

He also said new technology has started playing a role in new prospects. For instance, Cabot has drilled horizontal Devonian shale wells north of Charleston and currently has an interest in a multilateral horizontal coalbed methane well being drilled by another company.

Depending on the coal seams encountered, Walen said the well may have as many as five laterals, each extending for several thousand ft. The well uses a patented technology that has a central vertical wellbore, used as sump from which water is pumped, according to Walen.

He said that these horizontal wells have the potential to produce coalbed methane at rates several orders of magnitude greater than a vertical well.

For example, it has been reported that one multilateral horizontal coalbed methane well drilled in late 2001 continues to produce 2.9 MMcfd of coalbed methane (OGJ Online, Aug. 7, 2002). This rate is significantly greater than good vertical Appalachian coalbed methane wells that flow about 200 Mcfd, with most producing less than 100 Mcfd, Walen said.

Cabot also has drilled some deep plays in the eastern US. Last year, a Trenton Black River well in West Virginia had excellent shows, but no extent. "It was plugged and abandoned, Walen said. "Currently, because of their high cost, we are looking for partners for our deep prospects in the East."

"Some of the bloom has faded from the Trenton Black River in West Virginia, but it is still strong in New York," he added. He saidthat some good wells in New York have produced at rates greater than 10 MMscfd. But the New York and West Virginia plays are different. In New York they are mainly dolomites, whereas in West Virginia the play mostly consists of fractured and faulted limestones.

Cabot's holdings are mostly in West Virginia.

Growth opportunities
Cabot's increased investment in the Gulf Coast is a main driver in transforming it into a growth-oriented company. "The company now devotes over half its capital budget to this area," Walen said.

"The Lower 48 states are not a big hunting ground for large oil deposits, but gas is another story," he added. "We think there is a real future in gas."

Walen sees many places to drill for gas in the US, especially in the Rockies, where large gas deposits certainly will be found.

In the West, most prospects are on federal land, managed by the US Bureau of Land Management (BLM). To obtain the rights to drill on federal land, companies have to go through a nomination process and be prepared to allow plenty of time for the paperwork required to obtain final drilling permission, according to Walen. He said that it is possible to obtain permits, but a company must plan its program to account for the extra time required.

On the Texas Gulf Coast, Cabot mainly focuses on the Frio sands but also looks for opportunities in the Vicksburg, Wilcox, and Miocene plays in South Texas. Its operations are mostly onshore, but in the bays, Cabot has drilled from barges and from shore with extended-reach wells if the waters were too shallow for barges.

Walen said Cabot drilled some wells south of Rockport, Tex., in the Corpus Christi area, with extended reaches from shore of 6,000 ft and 70° angles. He said four consecutive wells drilled in 2002 were successful and drilled without significant problems.

Cabot locates these wells based on amplitude-driven structural plays, with one to three wells on each structure. He added that everything Cabot drills on the Gulf Coast is 3D seismic-controlled, and with good velocity control properly imaged fault blocks can have a high success rate.

Many Gulf Coast wells drilled by Cabot are deviated. Walen said that even its onshore wells need to be kicked off and steered to target because in many cases the surface locations are not over the target. This is the case especially in the Louisiana transition zone where the surface locations need to be confined to certain slips or canals.

Cabot extensively uses such technology as geosteering, logging-while-drilling, and measurement-while-drilling.

Walen said that, unlike 2 years ago, rigs are now readily available and costs are either stabilized or have gone down. He also said that pumping services are more competitively bid with somewhat reduced to flat prices.

He sees deep sand plays, such as those at 14,000-20,000 ft in Louisiana; tight sands plays, such as Jonah and Pinedale fields in the Green River basin; and coalbed methane in the Rocky Mountains as having great potential.

Walen said Cabot focuses primarily on sweet gas because sour gas is more expensive to drill for and produce.

Technology helps
Walen says Cabot is a "user of technology, not a developer." Some technologies on the horizon that he says he is interested in are drilling with casing and logging through casing. "Logging through casing would be especially useful for Cabot's many old wells in Appalachia," Walen said.

Although Cabot acquires new seismic data, it also reprocesses old data. "It is amazing how you can take 1997 data and run it through new software and image structures not seen before," he said.

For locating targets, Walen said Cabot has found high-frequency imaging very effective. He also expects that more improvements in seismic acquisition and new processing techniques will result in more prospects and drilling advances.

Career highlights

Michael B. Walen is senior vice-president, exploration and production, for Cabot Oil & Gas Corp., Houston. He has more than 30 years of experience in the oil and gas industry.

Walen joined Cabot in April 1987 as a senior geologist for Rocky Mountain operations and has held various exploration-related positions while working in three of Cabot's four core areas. Prior to joining Cabot, Walen worked in various exploration assignments for Tenneco Oil Co., Texas Oil & Gas Corp., Patrick Petroleum Co., and PetroCorp. Inc.

Walen holds a BS in geology from Central Washington University and an MS in geology from Western Washington University.