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EnCana Tests Tighter Well Spacing at Jonah Field

With federal approval to reduce well spacing in Wyoming's Jonah field to 10 acres from 40 acres, an EnCana Corp. executive said the Calgary-based producer plans to significantly boost its natural gas volumes there.

Speaking at the Howard Weil Energy Conference in New Orleans, Roger Biemans, president of EnCana Oil & Gas (USA) Inc., said the company has received approval from the state of Wyoming to add three pilot wells on five-acre spacing at the Jonah field. The density requirements had been at 40-acre spacing since 1986.

If the five-acre spacing eventually becomes the standard, Biemans estimated that EnCana would be able to drill an additional 1,800 wells at its Jonah site, where it already has achieved success. In 2004, it averaged 400 MMcf/d from 400 wells, and it owns 75% of an estimated 10 Tcf in the Jonah field.

The Jonah play is part of EnCana's strategy to focus more on Lower 48 unconventional natural gas plays, Biemans said. By the end of this year, it plans to sell $3 billion of mature, conventional gas assets in the Western Canadian Sedimentary Basin, the Gulf of Mexico and Ecuador to move resources toward its core properties.

About 75% of EnCana's current production in unconventional resources comes from tight-gas sandstone like the Jonah field. However, EnCana also has core operations in the Fort Worth Basin, a Barnett Shale play west of Dallas, where its unconventional gas output is targeted to reach 90 MMcf/d in 2005 -- up from 27 MMcf/d in 2004.

In East Texas, where EnCana also works in Barnett Shale, the company plans to drill 85 wells this year, up from 50 in 2004. Another play, the Piceance Basin in Colorado, will see an increase in drilling to 330 wells from 250 in 2004.

EnCana plans to spend between $4.5-4.8 billion for capital projects this year, 90% to drill existing properties, Biemans told the audience. Projected sales volumes are forecast to be 4.25-4.5 Bcfe/d in 2005, with 27% from U.S. properties. He noted that about 80% of EnCana's total output will benefit from higher gas prices this year, and 53% of its production is protected through fixed-price swaps and collars and puts and call options.

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