Upstart independent Ultra Petroleum, which has steadily grown its natural gas reserves more than 24-fold in Wyoming in the past five years, expects to see a 37% increase in output this year in the prolific Pinedale Anticline and Jonah fields, the CEO said last week.
Speaking Tuesday at the 2005 Oil & Gas Investment Symposium in New York, CEO Michael D. Watford told analysts that the Wyoming Oil and Gas Conservation Commission's (WOGCC) decision to allow pilot drilling programs with denser spacing for wells is a positive for the company.
The density requirements in Wyoming had been at 40-acre spacing since 1986, but earlier this month, EnCana Corp., the largest CBM producer in Wyoming, won approval to reduce well spacing in the Jonah field to 10 acres from 40 acres. The WOGCC also granted approval to add three pilot wells on five-acre spacing (see NGI, April 11). Ultra is the third largest operator there after BP.
"We've discovered that there is less water saturation in the rock than expected," Watford said. "That means there's more gas in place.
"We've got a few more folks getting 20-acre pilots," said Watford, and with 8 Tcf of gross potential on the Pinedale Anticline alone, he's optimistic that Ultra's application to drill some pilot wells on 10-acre well spacing will be approved. The WOGCC has scheduled a hearing on the application for May 10.
"We've got 1,160 locations, and on 10-acre spacing, we could put 619 wells in the Pinedale," said Watford. "With 20-acre spacing, we could put 511."
Watford also is counting on Ultra's 98% drilling success in Wyoming since 2000 to carry it forward. The producer controls more than 178,000 gross acres (101,000 net) in and around the prolific 25-square-mile Jonah gas field and the 100-square-mile Pinedale Anticline area. At a minimum, the company estimates that the recoverable reserves between the two fields is about 20 Tcfe.
This year, the company upped its capital spending budget $100,000 to $290,000, with most of the money focused in Wyoming. It expects to drill 100-110 gross wells there this year, with overall production growth at about 37% to 67.5 Bcfe.
"We doubled our inventory between 2003 and 2004. Right now we've got 1,000-plus long-life natural gas drilling locations," he said. "We plan to grow wells in Wyoming. The real value to the company is in Wyoming."
Watford noted that the "most striking" feature of the Wyoming drilling program is its low cost. Even if gas were to fall to $2/Mcf, Watford said Ultra would still make money. The company's rate of return is 62%, and its finding and development cost is $.70/Mcfe.
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