The U.S. Bureau of Land Management (BLM) last Monday, May 21, issued the Record of Decision and the Final Environmental Impact Statement (FEIS) for the Atlantic Rim Natural Gas Development Project in Carbon County, WY, allowing the drilling of up to 2,000 wells, most of them coalbed methane, with a potential for 1-2 Tcfe of reserves.

BLM acted on the petition from Warren Resources Inc. and its partner Anadarko Petroleum Co. to explore and potentially develop resources contained in 270,080 acres in the Rockies area, including 1,800 coalbed methane (CBM) and 200 deeper conventional wells. The area averages about 10 miles in width and runs nearly 40 miles from north to south, from Rawlins to just east of Baggs, WY. The partners, along with another independent, Double Eagle Petroleum, already have drilled about 150 exploration wells in the area as part of an interim program to determine the potential.

Warren is estimating the partnership will drill 1,600 wells, or 800 net to each partner, with a per-well production average of 1 Bcf over the life of the well. This would put the reserve total estimate at 1.6 Tcf. BLM estimates overall production of 1.35 Tcf. Warren and Anadarko plan to start full-scale development drilling activities in mid-July. The joint venture intends to initially drill 70 producing CBM wells in the 21,929 acre Sun Dog Unit, which Warren considers the heart of the play.

Based upon the current knowledge of the geologic formations, the BLM's proposed minimum well spacing is 80 acres per well. An additional 200 wells would be drilled to access conventional natural gas found in other formations, generally expected to be deeper than the Mesaverde coals.

"The issuance of the final Record of Decision for drilling the Atlantic Rim project in the Washakie Basin is a tremendous step forward for the commencement of full scale development of this reserve rich play. We believe this will help Warren realize its potential during the next several years," Warren Resources said. "The Record of Decision is a culmination of nearly six years of cooperative effort between the BLM, various local, state and federal agencies, environmental organizations and industry."

Warren already is filing for local permits. Because the project partners have argued and won appeals court-level decisions on multiple environmental challenges over the last six years they do not envision any further delay, a Warren spokesman said. Water produced along with the CBM will be reinjected, and drilling is restricted to certain seasons to accommodate wildlife.

Double Eagle said it plans to drill and operate up to 268 additional wells on 80-acre spacing on the Catalina Unit, gaining approximately 110 net wells. Including both operated and nonoperated properties, the company, through agreements with Warren and Anadarko, expects to participate in up to 1,800 gross wells and 259 net wells over the next five years on the Atlantic Rim.

"Wildlife drilling restrictions will limit our drilling window to July 15 through Nov. 15, a Double Eagle spokesman said. For this season "we plan to have two rigs drilling on our operated acreage, while Warren/Anadarko plan to operate three rigs on their acreage. By next year we may be able to get more rigs in there for our limited drilling period."

Headquartered in New York, Warren Resources' exploration and development subsidiary, Warren E&P Inc., is based in Casper, WY, and Long Beach, CA. The company is primarily focused on the exploration and development of coalbed methane properties located in the Rocky Mountain region and its water flood oil recovery program in the Wilmington Unit located in the Los Angeles Basin of California.

Double Eagle, based in Casper, WY, currently operates 14 CBM wells in the Cow Creek Field of the Atlantic Rim. The 14 wells averaged 395 Mcf/d per well in 2006. The company said finding costs have averaged less than $1/Mcf for the project.

The Notice of Availability of the Record of Decision for the FEIS was published in the U.S. Federal Register May 21 and can be viewed on the BLM's website at http://www.blm.gov/wy/st/en/info/NEPA/rfodocs/atlantic_rim.html.

The Atlantic Rim Natural Gas Project began in 2000. Warren Resources and Anadarko in December of 2002 entered into an agreement to jointly explore for and develop CBM resources in the fairway of the Atlantic Rim area of the Washakie Basin in southern Wyoming (see Daily GPI, Dec. 23, 2002). The proposed project area included a mix of contiguous public lands, in holdings of private land and a "checkerboard" mix of public and private lands.

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