The Pinedale Anticline in southwestern Wyoming, home to the prolific Jonah Field, covers only about 90 square miles on about 150,000 acres, but the natural gas output from the fairway's tight sands has been nothing short of remarkable. Now testing is under way to determine whether gas shale development could make the Anticline and neighboring basins even more remarkable.

Ultra Petroleum Corp. CEO Michael Watford, whose company is one of the largest producers in the Anticline, said last week that his company was "looking forward to 40 or 50 years of easy production from the Pinedale...We don't drill horizontal wells, everything's vertical."

However, speaking at the Lehman Brothers CEO Energy/Power Conference in New York City, Watford hinted that the company may have plans down the road to go sideways.

The Houston-based independent's drilling program mostly targets the upper cretaceous Lance Sand Fairway formation, which runs through the Anticline and Jonah field. The formation is at least 65 million years old -- a thick sequence of tight, overpressured, gas-charged sands, with the thickest accumulations of potential pay sands underneath the Anticline.

Gas sands, however, are just one part of the formation. The fairway, on a "smallish" 150,000 acres, is actually a thick sequence of interbedded sand -- and gas shale -- with pay thickness reaching more than 1,000 feet in some areas.

"We are doing more work in nonsands, like the Barnett, Woodford [shales]," said Watford. Ultra has done 3-D seismic tests across the play. "If you look at a section, you have shallower, behind-pipe reserves. The Pinedale is a nonsand play, and the core analysis shows the entire play. We think we have sands in shale. We've only done a handful so far, but if we can add more pay, more gas in place because of shale, then obviously, the gas in place has to go up."

According to the Wyoming State Geological Survey, the "organic-rich Cretaceous shales in Wyoming are outstanding source rocks and should be considered potential shale gas targets." Successful gas shale plays in Wyoming, it said, will probably "be in a geological setting conducive to fracturing," which has been the key to success in Texas' Barnett Shale. "With new drilling and completion techniques, the recovery of stored natural gas in the Cretaceous shales of Wyoming could be substantial..."

If the gas shale tests by Ultra and its partners prove worthwhile, "this could be a huge adder for us if it works. But it will take several years to prove that," said Watford. "We have proved there is gas in deep horizons." He said Ultra and Shell Exploration, which also is a large Anticline operator, are jointly drilling another well, which is expected to be completed before November. "We'll get down and test again and see what we have. It is a huge resource possibility for us."

How huge? As Donald Trump would say, "HUGE." The Jonah field is now the sixth largest field in the United States based on its gas reserves, and the Anticline holds the second largest amount of reserves behind the San Juan Basin.

For now, Ultra doesn't have to wait to see if that gas shale thing works out. Ultra is forecasting a 27% gain in its estimated production this year. Since Jan. 1, Ultra and its partners Questar Corp. and Shell have ramped up 115 new wells in the Anticline at an average initial rate of 8.1 MMcf/d; maximum initial rate of 15.3 MMcf/d, Watford said. And Ultra "hopes to participate in 200 gross wells this year with Questar and Shell."

"Clearly, we've had a lot of successful wells this year," said Watford.

In addition to being Wyoming's biggest gas producer in 2006, the Jonah field also was the state's top oil producer last year. Pinedale, as it becomes more developed, is eventually expected to overtake Jonah in both gas and condensate production, according to the petroleum experts at the University of Wyoming.

The state's sand and rocks are not limited to the Anticline. One new unconventional gas shale play generating solid results in southwest Wyoming is the Baxter Shale, located in the nearby Vermillion Basin. In March, Questar Exploration and Production Co. (QEP), an affiliate of Questar Corp., announced a 9 MMcf/d well producing from the Baxter and Frontier formations (see NGI, March 5). QEP attributed the extraordinary gas output to naturally occurring fractures in the rocks.

QEP holds about 140,000 net acres in the Vermillion Basin, and as it watched the growing success in the Barnett Shale, the producer took another look at its leasehold, whose core is the Baxter Shale.

The 9 MMcf/d well in the Baxter was QEP's first horizontal well. Once the well is tested, officials said it would take about six months of production to determine the "ultimate" results. QEP officials estimate per-well ultimate recovery at 2-4 Bcfe in the Vermillion play.

QEP is working on an environmental impact state to cover the entire area to evaluate drilling for up to 4,000 wells.

"The bottom line is there's a enormous amount of gas...but the key is the rate of recovery not the gas in place," said Questar CEO Keith Rattie. "Watch out for news about the Vermillion basin. The most significant impact for us is the Pinedale...but watch the progress with the next well in Vermillion, which is a horizontal well...Horizontal drilling is part of the magic that turned the Barnett Shale and others into the moneymakers they are today."

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