Encana Oil & Gas (USA) Inc. and a drilling partner are packing up and moving operations out of two Pennsylvania counties after determining that the first natural gas wells drilled in Luzerne County, PA, "were unlikely to produce natural gas in commercial quantities."
Encana's Kit Akers, Group Lead for Land acquisition, wrote a letter earlier this month to landowners who have leased thousands of acres over the past two years to the Encana Corp. subsidiary and partner WhitMar Exploration Co., which are both headquartered in Denver.
The letter followed results from the drilling phase for two exploratory wells begun in late June in the 30,000-net acre Moose Prospect.
The results indicated that the Buda 1H and the Salansky 1 H would not produce commercial gas, Akers said. To further confirm the findings, the companies tested production by completing an exploratory well.
"We recently conducted a fracture stimulation, followed by a production test of the Salansky 1H well, which confirmed our initial findings," Akers wrote. "Therefore, following consultation with WhitMar, we have decided to discontinue all activity in the area immediately."
The companies also said they won't extend their leases in Luzerne or Columbia counties. WhitMar formed the joint venture in the two counties with Encana in November 2009. Their partnership was centered on a block of leasehold in those two counties.
"We have spent the past year setting a strong foundation for responsible natural gas development in your community," Akers said in the letter, which was sent to landowners who had leased with the companies. "As we bring our operations to a close in Luzerne County, we will continue to demonstrate this same level of commitment to responsible operations."
The companies, said Akers, will "work closely with the Pennsylvania Department of Environmental Protection [DEP] to ensure that all regulations are followed with respect to closing out our operational activities."
According to the DEP, about 1,150 leases are in Luzerne County, mostly in the Back Mountain and Fairmount Township. A DEP spokesman told Shale Daily that Encana had permits to drill 10 additional wells in the Lake and Fairmount townships, and to build a natural gas processing facility in Lake Township. The Lake Township permits were issued Nov. 5.
In Columbia County, DEP has issued a few permits to drill. Williams Production Appalachia is under way with an exploratory well, which is near Encana's Fairmount Township well, according to DEP. Carrizo Oil and Gas Co. also plans to begin exploratory drilling in nearby Wyoming County early next year.
Neither Encana nor WhitMar are pulling out of the Marcellus Shale. WhitMar has ongoing drilling operations in Chemung County, NY, and in Pennsylvania's Lycoming and Susquehanna counties.
Encana Corp., which is one of the largest natural gas producers in North America, is focused on unconventional production. Most of its acreage is in the Haynesville/Bossier Sands and Barnett Shale of Texas; in the Jonah Field's Pinedale Anticline and in the Piceance Basin of the Rocky Mountains; and in most recently in the Collingwood/Utica shales of Michigan. Most of Encana's activities in the Marcellus Shale have been "exploratory in nature," the company said.