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Western Supply Seeking Eastern Demand

As the gas industry evolves to greater reliance on unconventional resources, the Rocky Mountain region will play a bigger role in meeting the nation's gas needs. Couple this with growing demand in eastern markets and you have a strong West-East trend in natural gas flows.

Gas production from the Rockies is "the engine" of America's natural gas industry, and the "world famous" Pinedale Anticline in southwestern Wyoming will be contributing to the country's gas supply for years to come. Those were the views of two producers speaking at GasMart 2006 in Denver last week.

Fred Barrett, CEO of Barret Barrett Corp. said his company is harnessing technology to drive production growth from the Rockies. He noted that nearly 100% of the Gulf Coast region has been shot with 3-D seismic; however, only about 15% of the Rockies has been surveyed using 3-D seismic. Look for Barrett to be shooting more 3-D seismic than virtually any other Rockies producer, he said.

Barrett described his company as a "true exploration company" as opposed to one that acquires and then exploits assets. He said that Barrett is quickly becoming a leader in Rockies tight sands gas. The company has an eight-year drilling inventory, which doesn't include infill drilling and downspacing. At the end of 2005 Barrett had 26 exploration projects, more than 10 Tcfe of unrisked potential and more than 1.2 million net undeveloped acres.

Bill Barrett's production has grown from 24 MMcfe/d in the fourth quarter of 2002 to 134 MMcfe/d in the fourth quarter of 2005. Of that, 33 MMcfe/d came from the Uinta Basin, 50 MMcfe/d from the Wind River, 7 MMcfe/d from Williston, 22 MMcfe/d from Powder River, and 22 MMcfe/d from the Piceance Basin. Barrett's February 2006 production was 140 MMcfe/d.

In the Piceance Basin, Barrett had 14,302 net undeveloped acres at the end of 2005 and 115 Bcfe of proved reserves. Net production has grown from about 6 MMcfe/d in September 2004 to about 27 MMcfe/d in February 2006. Capital spending for 2006 is $131 million for 76 wells in the tight sands gas basin. Bill Barrett's West Tavaputs Project in Utah's Uinta Basin has seen production grow from about 1 MMcfe/d in June 2002 to 40 MMcfe/d in February 2006. At the end of 2005 Barrett had 43,194 net undeveloped acres; 74.5 Bcfe of proved reserves. Capital spending for 2006 is $61 million for 19 wells.

Stuart Nance, director of oil and gas marketing for Ultra Petroleum, told GasMart attendees that the evolution of the U.S. gas industry reminds him of the birth of the Transcontinental Railroad. The question for the gas industry is where will its "golden spike" be driven, which is to say where will the line of demarcation be between the West and the East.

The Greater Green River Basin is the most prolific in the Rockies, Nance said, with 3Q2005 production of 3.16 Bcf/d. Of this, the Jonah Field contributed 742 MMcf/d; the Pinedale Anticline, 428; Wamsutter, 58; Echo Springs, 82; Wild Rose, 65. Other Wyoming fields contributed about 1.7 Bcf/d, and Colorado production contributed 53 MMcf/d.

Although it was discovered in 1955, Nance said that not many people are familiar with the Pinedale Anticline. Pinedale currently is ranked as the third largest gas field in the United States based on proved reserves, just above the Barnett Shale of North Texas.

In the beginning Pinedale completions were poor and there were no pipelines to connect gas to market. Now, however, Nance calls it "the World Famous Pinedale Anticline" in the hope that the play's notoriety will spread. The Pinedale Anticline is 90 square miles and has 350 wells producing about 650 MMcf/d. Estimates say there is about 44 Tcf of gas in place with a recovery factor of about 60%. Besides Ultra Petroleum, Questar and Shell are active in the play, Nance said. Deeper horizons are to be tested this year and a supplemental environmental impact statement is under way for year-round access.

In addition to the Rockies Express project, El Paso's proposed Continental Connector project is further evidence of the West-East orientation of the gas industry. Gary Charette, El Paso Pipelines Group vice president for marketing, development and asset optimization, said Continental Connector will leverage the El Paso system to access as many eastern markets as possible. In a nonbinding open season Charette said El Paso garnered interest in 3 Bcf/d of capacity. And Continental Connector just got a firm commitment for 175 MMDth/d in capacity from Oklahoma City-based Chesapeake Energy Corp.

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