EnCana Corporation has established a leading land and resource position in two of North America's most exciting new natural gas resource plays, the Horn River Shale in northeast British Columbia and the Haynesville Shale in Louisiana and Texas. EnCana has drilled a series of exploration wells that has shown strong potential to deliver commercial volumes of natural gas.
"Recent exploration wells drilled by EnCana, its partners and industry, indicate these two resource plays hold the potential to eventually become amongst the largest in North America. Each of these plays has been compared in size and scope to the prolific Barnett Shale in north central Texas, which currently produces more than 3 billion cubic feet per day and continues to grow. EnCana has assembled large land positions in each of these emerging plays - 220,000 net acres in the heart of the Horn River Shale play and 325,000 net acres in the Haynesville Shale play fairway. These are very meaningful positions, each with the potential to ultimately achieve production levels approaching 1 billion cubic feet per day net to EnCana, which is comparable in size to the potential we have announced in our more-established plays at Montney in northeast B.C. and Deep Bossier in East Texas," said Randy Eresman, EnCana's President & Chief Executive Officer.
"The EnCana team has had tremendous success in finding and unlocking the potential of some of the largest new unconventional natural gas plays in North America. Incorporating these plays into EnCana's already very strong portfolio has the potential to significantly accelerate EnCana's growth rate to an even higher sustainable level. At the same time, we expect that as these plays mature in their development, they will have a positive impact on our already very low natural gas supply cost, thus ensuring profitability under a wide range of future prices. I am extremely proud of the achievements of our teams," Eresman said.
Strong prices likely to enhance 2008 activity levels and capital investment
"With the strong production from across our resource plays, and higher than budgeted cash flow due to robust commodity prices, we expect to increase drilling and continue expanding our land holdings in our shale play areas. At the same time, we will continue to high-grade our portfolio of assets through the divestiture of non-core properties through the balance of 2008," Eresman said.
EnCana largest landholder in Horn River natural gas play
EnCana discovered the Horn River natural gas play in 2003 and has since added extensive acreage to become the largest landholder in the northeast B.C. basin. In 2007 EnCana formed a 50/50 joint venture on a portion of the play with Apache Corporation. EnCana and Apache have been the most active drillers in the basin. Together they have drilled nine production wells. In the first quarter of 2008, Apache drilled three horizontal wells with initial natural gas test rates of 8.8 million cubic feet per day (MMcf/d), 6.1 MMcf/d and 5.3 MMcf/d. EnCana has drilled four additional wells that are currently in various stages of completion. The wells are drilled and completed using similar techniques to those successfully implemented in the Barnett Shale in Texas - large multistage fracs in long-reach horizontal wells. Although the first two of these recent four wells have just begun to flow, early results are indicating strong production potential.
"We have been working on this play for several years and have established a leading land and technology position in what we believe could become one of the most significant shale gas plays in North America. The Horn River Shale is an emerging play in a remote northern location that will require substantial road and pipeline installation before full-scale development can occur. Advances in our multi-stage fracturing and horizontal drilling are expected to improve the economics of the play in the months and years ahead. The B.C. government continues to work with industry setting the business foundation that helps advance these unconventional natural gas plays," said Mike Graham, Executive Vice-President and President of Canadian Foothills Division.
Haynesville Shale potential could rival Barnett Shale
In the emerging Haynesville Shale, EnCana Oil & Gas (USA) Inc. acquired its first leases in 2005, drilled its first three vertical wells in 2006, and has been continually acquiring land. In 2007 EnCana Oil & Gas signed a 50/50 joint exploration agreement with Shell Exploration & Production, a division of Royal Dutch Shell. To date the companies have drilled three vertical and two horizontal wells and are currently operating two rigs in the area. EnCana plans to operate five rigs by year-end and it is in an industry-leading position in the play.
"EnCana is a leader in finding and developing natural gas resource plays, evidenced by the fact that we have captured large positions in substantially all of the major unconventional gas plays in North America. The potential of the Haynesville Shale play was established in February with the completion of our first horizontal well. The gas well flowed at an initial production rate of more than 8 MMcf/d, which would rank it amongst the most productive Barnett Shale wells. The Haynesville Shale is on the verge of transforming from an emerging play to one of significant commercial development, rivaling the quality and scope of the Barnett Shale play," said Jeff Wojahn, Executive Vice-President and President, USA Division.