Re: Makó and Canaan - a very interesting Horn River article
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Falcon is a global energy company with projects in Hungary, Australia & South Africa
Developing large acreage positions of unconventional and conventional oil and gas resources
Message: Makó and Canaan
The following article was in the Dallas paper and has some interesting facts about the Horn River Basin. The portion on Devon energy is well worth taking a good look at for the comparisons to the Mako Trough. The Devon piece talks about 600 feet of pay and doing stacked horizontals from the same well and up to 32 wells from each pad. The Sloznok appears to be quite a bit more attractive given the comparisons to the difficulty outlined in getting to the Horn River location; the winter temperatures; the lack of infrastructure; the potential 900 feet of pay in the Sloznok; and the lower overall price for natural gas in N. America versus central Europe. However, the depths, temperatures and pressures are greater in the Mako which will add time, money and fine tuning to the whole process. The list of companies shown at the bottom of this article could also be added to the short list of potential partners in our remaining 100% owned lands if Exxon is successful. Regards Paul
Next Big One? - Canada's Horn River Basin has natural gas producers envisioning another Barnett Shale
Canada's Horn River Basin has natural gas producers envisioning another Barnett Shale
By JACK Z. SMITH
jzsmith@star-telegram.com
jzsmith@star-telegram.com
The Dallas-Fort Worth area and Canada’s remote Horn River Basin are more than 2,300 miles apart, but there’s nevertheless a significant new link between the two highly diverse regions.
Horn River, in a heavily forested area of northeast British Columbia where subzero temperatures are commonplace, is now drawing comparisons to North Texas’ Barnett Shale, a hotbed of drilling activity recently cited as the biggest natural gas-producing field in the United States.
There’s increasing talk that Horn River, scene of a budding natural gas play attracting major oil industry players, could become another Barnett Shale in terms of headline-making gas production. The two regions have very similar geologies, and both are "unconventional" gas plays requiring advanced horizontal drilling techniques and extensive hydraulic fracturing to make them economically attractive.
The key players involved in Horn River also have strong Metroplex connections. Among the companies staking out large Horn River leaseholds are Fort Worth-based Quicksilver Resources, Irving-based behemoth Exxon Mobil Corp. and Oklahoma City-based Devon Energy, which is the No. 1 gas producer in the Barnett Shale and has a 550-employee North Texas work force.
Quicksilver’s quest
Horn River "has the potential to be one of North America’s most significant new shale plays," said Rick Buterbaugh, Quicksilver’s vice president for investor relations and corporate planning.
The 600-employee company, with 450 employees in Fort Worth, has about 127,000 net acres in the Horn River leased from the Canadian government. It has drilled two wells, but hasn’t completed them. The completion process includes hydraulic fracturing, the high-pressure blasting of the underground rock layer with water and sand to allow gas to flow into a wellbore.
At Quicksilver’s shareholder meeting in May, CEO Glenn Darden said Horn River has the potential to be "our next big, big project." Quicksilver estimates it can recover 5 trillion cubic feet of natural gas from its Barnett Shale properties. The company’s Horn River Basin holdings appear capable of producing more than that, based on the company’s substantial lease acreage there, Buterbaugh said.
Quicksilver’s experience drilling in the Barnett Shale should prove valuable at Horn River, he said, because there appear to be "many similarities . . . from a geological standpoint" between the two.
Energy companies estimate that a typical Barnett Shale well might yield 3 billion to 4 billion cubic feet of gas during its producing lifetime. But Houston-based Apache Corp., which has drilled at least 28 Horn River wells along with Canadian partner EnCana Corp., projects that some Horn River wells could recover 10 billion cubic feet.
Initial production high
In the Barnett Shale, early production rates of the biggest "monster" Barnett wells have been about 8 million to 10 million cubic feet of gas per day. Apache, however, said three of its Horn River wells "have been brought online at gross initial production rates of more than 16 million cubic feet per day" and were still producing 8 million to 10 million cubic feet daily after two to three weeks.
A July 10 report in The Wall Street Journal said Exxon Mobil officials, after drilling four Horn River test wells along with partner Imperial Oil, concluded that the basin’s wells have the potential to produce 16 million to 18 million cubic feet per day.
Fat pay zone
Horn River has a "very thick" producing zone of 600 feet or more, said Brent Snyder, Devon Energy’s exploration manager in the Canadian play.
With such a fat pay zone, Devon has been drilling twin sets of horizontal wells, "one on top of the other," with one penetrating the upper part of the shale and the other the lower part, Snyder said.
Devon, which has leased 153,000 acres at Horn River, is drilling wells vertically for 7,000 to 9,000 feet and extending some horizontal "laterals" more than 4,000 feet.
"We are targeting 5 [million] to 6 million cubic feet of gas per day per well, but would like to achieve 10 million per day;" Snyder said. The company thus far has drilled only five test wells.
Although Horn River looks promising, it has its drawbacks, including higher-cost drilling in a remote area where there is limited infrastructure such as roads and pipelines. The nearest town, Fort Nelson — which has a population of 5,000 and an economic base long centered on forestry and petroleum — is at least three hours away from where wells are being drilled.
Nasty winters
Winters can be brutal, with heavy snows and temperatures as low as 40 below zero, Snyder said. Nevertheless, many wells are drilled in the winter, with equipment transported on ice roads, to avoid bogging down in swamplike terrain known as the muskeg during warmer months.
Horn River oilfield workers stay "largely in camps" in the field, Snyder said. Dwellings resemble dormitories or trailers connected with hallways. "They can be quite extravagant. You’ve got a fitness center and games center in some of them," Snyder said.
Fine-tuning drilling
Only several dozen wells have been drilled at Horn River. Devon and other companies expect to dramatically reduce the number of days it takes to drill wells and to substantially boost production after getting a finely honed drilling system and more roads in place, as well as learning more about the peculiar nuances of the British Columbia basin.
Devon once took 30 days to drill Barnett wells but now averages about 15 to 16 days, company spokeswoman Alesha Leemaster said. It hopes for similar improvement at Horn River.
While the Barnett and Horn River geologies are similar, Horn River wells have higher pressures and may go 1,000 to 2,000 feet deeper.
"It’s a combination of the right bit, the right mud system and the right rig," Snyder said. Some energy companies are using special rigs designed to deal with the bitter cold of the Horn River Basin. The rigs "are pretty much enclosed," he said.
32-well pad sites?
To slash costs, reduce environmental impact and "minimize the amount of muskeg we have to deal with," Devon plans multiple wells at each drill site, Snyder said. "We may have up to 32 wells off of one pad, going out like the spokes of a wheel," he said.
For the time being, Devon is shooting for a cost of $8 million to $8.5 million per Horn River well, roughly triple what it might cost now to drill in the Barnett Shale.
The Horn River energy infrastructure is expected to improve in the next few years. Significant gas production might be realized by 2012 or so. The United States, and most specifically California, will likely be the ultimate end user for much of the Horn River gas, Snyder said.
The Horn River Basin’s great allure is simply "the sheer volume of gas in place," he said, with estimates ranging "anywhere from 300 [trillion] to 600 trillion cubic feet." Of that amount, at least 20 percent — 60 trillion to 120 trillion cubic feet — probably can be recovered, he said.
"So the prize here is quite large," he said.
Key players in the Horn River Basin Apache Corp.
ConocoPhillips
Devon Energy
EnCana Corp.
EOG Resources
Exxon Mobil
Imperial Oil
Nexen
Pengrowth
Petro-Canada
Quicksilver Resources
Stone Mountain Resources
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