With drilling programs beginning to hit their stride in the once contested Atlantic Rim leasehold and across the southeastern corner of Wyoming, small and large exploration and production (E&P) companies are stepping up their coalbed methane (CBM) programs in the Greater Green River Basin to take advantage of the Rockies Express Pipeline (REX) and sharply higher natural gas prices.

Wyoming’s Greater Green River Basin has produced oil and gas from multiple reservoirs for more than 60 years, but large amounts of gas remain untapped in tight gas sandstone reservoirs. What’s changed in the basin is the same thing that’s changing the gas market across North America: the evolution of new gas drilling technology.

The basin covers an area of about 19,700 miles, bound by the Wyoming Overthrust Belt on the west, the Wind River Mountains to the north, the Rawlins Uplift and the Park Range Uplift on the east, and the Uinta Mountains and Axial Basin Arch to the south.

One particular area pulling in producers is the Atlantic Rim and the southern edge of the play.

The Atlantic Rim comprises more than 270,000 acres of land that is managed by the U.S. Bureau of Land Management (BLM). The BLM last year issued the Record of Decision (ROD) and the Final Environmental Impact Statement for the Atlantic Rim, which cleared the way for Anadarko Petroleum Corp. and Warren Resources Inc. to proceed with a joint CBM project to drill up to 2,000 wells in Carbon County, WY (see NGI, May 28, 2007). Double Eagle Petroleum Co., also part of the ROD, now operates more than 20 CBM wells in its Catalina Unit.

Environmental groups attempted to prevent the development from moving forward, but a U.S. district court judge late last year denied a preliminary injunction (see NGI, Dec. 10, 2007). Producers operating in the gas-rich terrain are not looking back.

Double Eagle, whose Atlantic Rim reserves are located in the Eastern Washakie Basin, expects to drill between 24 and 48 wells in the Catalina Unit this year. In the coming years around 800 CBM wells are planned — for good reason. Estimated proved reserves of Double Eagle’s Atlantic Rim wells are 0.9-1.2 Bcf/well. Estimated cost per well, including infrastructure, is $1.1 million; anticipated finding and development costs approximate $1.00/Mcf.

But here’s the kicker: in its Catalina Unit, Double Eagle’s first drilled wells had initial production rates of 200 Mcf/d, which increased to 450 Mcf/d in 18 months. And 10 new wells are now producing at rates that range from 100 Mcf/d to 1,650 Mcf/d. At the end of March, the average of all the new wells was 783 Mcf/d.

“Our new wells tested some very big rates for CBM, but it’s still early,” said Double Eagle spokesman John Campbell. Another 23 new wells are in the process of being hooked up and tested. Once those wells are operating, Double Eagle plans to conduct production tests on all of the 33 new wells.

“Maybe by the time we do get new production results, REX will finally be completed into Missouri,” said Campbell. “In the meantime, the delay hasn’t hurt much because prices have only gone up.”

The latest results may not be known yet, but in March Double Eagle reached a record level of gross sales volumes from its Catalina Unit (see NGI, April 7). The total gross sales volumes from the 24 wells that were on production exceeded 300 MMcfe, or an average of 12,500 Mcfe (9,230 Mcfe net to working interest) per well. Double Eagle in 2007 drilled 33 CBM wells in the Atlantic Rim leases. It also participated in 52 wells that Anadarko drilled and completed.

Meanwhile, Anadarko expects to drill 152 total wells in the Sun Dog Doty Mountain and other federal exploratory units in the Atlantic Rim. Anadarko had 69 wells scheduled for completion in Carbon County before mid-year. Partner Warren Resources also completed a new $250 million credit facility to help fund the joint CBM project. Total CBM production from Sun Dog was about 7.5 MMcf/d in the last three months of 2007. Sun Dog accounted for about 5 MMcf/d of Warren’s output.

“Based on these anticipated results, we plan to drill 245 gross wells in the Atlantic Rim project in 2008,” Warren CEO Norman Swanton said. “After eight years of hard work,” he said, the Atlantic Rim “should fuel reserve growth for a number of years to come.”

And New Frontier Energy Inc., a junior E&P based in Littleton, CO, is showing significant gains from the Slater Dome Field, which is on the southern edge of the Atlantic Rim. There, New Frontier’s CBM output jumped 282% in March. Output in the field rose to more than 1 MMcf/d — 34.3 MMcf (gross), compared with 12.1 MMcf (gross) in March 2007. The Slater Dome Field, in which New Frontier owns a 66% working interest, is located in the Sand Wash Basin, a sub-basin of the Greater Green River Basin of the Atlantic Rim.

From its Slater Dome Field operations, New Frontier’s revenue last month rose 63% to $142,500, compared with $30,800 in March 2007. The company received an average price of $7.78/Mcf for its gas last month, versus $4.74/Mcf a year ago.

With the western section of REX in place, New Frontier is ready to step up its drilling program, said President Paul Laird.

“The takeaway capacity of the REX-West pipeline continues to provide Rocky Mountain producers improved pricing for natural gas, and we hope our selling price will eventually approach parity with the widely quoted Henry Hub price in the future,” said Laird. “We intend to capitalize on this improved pricing scenario by boosting production significantly during 2008. Our new compression facility, which comes on-line at the end of April, will facilitate producing from six additional wells drilled during 2007.”

New Frontier’s proved reserves at the Slater Dome Field in February 2007 were independently estimated at 12 Bcf of gas based on 47 well locations. The producer said there are “potentially 631 well locations” on its 34,500 net acres.

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