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Wood Mackenzie: Rockies Contains Seven Multi-Tcf Shale Plays

July 14, 2008
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With all of the recent headlines about the massive natural gas shale plays in the Appalachian Basin, across Texas, Louisiana and British Columbia, some may have forgotten about the Rocky Mountains. However, by at least one estimate, there are seven multi-Tcf plays -- and maybe more -- trapped inside those big rocks waiting for discovery, said Wood Mackenzie researchers.

The report, "Seven Shale Gas Plays Emerge in the Rockies," outlines plays in formations in six basins stretching across the Rockies that range in depths of 3,000 feet to 16,000 feet. The plays, said Wood Mackenzie, typically contain multiple pay zones and solid production potential.

"While the Rocky Mountains region has successfully produced from unconventional resource types (such as tight gas, coalbed methane and shale oil), shale gas plays have largely been untapped," said Wood Mackenzie researcher Connie Lin. "Many of these plays are being tested for their commerciality Some of the other lays have been commingled with other reservoirs and produced for many years."

Included among those promising shales still to be tested for gas resource potential are the:

Most of the shales studied by the UK-based energy researcher already have some exploration wells, which have been drilled by various producers over the course of several decades. However, some of the shale plays, including the Lewis Shale, now are getting long looks not only because of higher prices but also because of new technologies that have improved field economics.

Wood Mackenzie researchers are intrigued by the possible reserves potential from all of the shales. However, based on information released by producers -- and a lot of information still remains proprietary -- Cane Creek in the Paradox Basin of Utah stands among the "highest performing play" based on initial well results.

The Cane Creek play, at depths of 5,000-9,500 feet, is 85-100 feet thick. According to data, initial drilling results have been estimated at 4,000-12,000 Mcf/d, and the estimated ultimate reserve (EUR) recovery rates are up to 6 Bcf. Well costs are in the $5.5 million range.

If Cane Creek's EUR numbers stand, the shale's output could be in the same league as the Barnett Shale of Texas, where average output is around 3.8 Bcf/d, noted Wood Mackenzie.

Meanwhile, the Baxter Shale in the Vermillion Basin also is high on the list of prospects. The basin may have some of the largest gas-in-place resources of any U.S. shale, according to Wood Mackenzie. Although it's in early stage testing, the play is estimated to contain 440 Bcf/square mile. For now, development has been limited by the high well costs (up to $7 million each) and initial output rates of 1,000-2,500 Mcf/d, which are considered low.

Also on the radar screen of a growing number of prospectors is the Pierre Shale. Interest in this Rockies play was piqued after Pioneer Natural Resources Co. disclosed that its testing estimated that its holdings contained around 2 Tcf of recoverable gas. Now XTO Energy Corp. and El Paso Corp. also are testing wells in the play; results have not been publicly disclosed. And the potential of the Gothic and Cody shales remains a question mark pending more well tests, said Wood Mackenzie. Bill Barrett Corp., a leading stakeholder in the Gothic play, is encouraged, and said it expects to have some results on its initial wells by the end of the year.

"Based on the sheer number of shale gas plays being explored, there is significant resource potential in the Rockies," said Lin. "While it is far too early to quantify the impact that these plays may have once they enter the development phase, it is clearly evident is that operates are ramping up drilling to explore these deeper resources. Should these companies success, the region could become a major producer of commercial shale gas in the Lower 48."

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