British Columbia’s Horn River Basin could be the “best” natural gas shale play in North America, matching or surpassing any of the touted “Big Four” shale gas fields in the Lower 48 states, EnCana Corp.’s Mike Graham said last week.

With an estimated 500 Tcf of original gas in place, the Horn River Basin can easily hold its own against the touted Lower 48 states’ Barnett, Haynesville, Marcellus and Fayetteville shales, which some call the “Big Four” shales, said Graham, who helms EnCana’s Canadian Foothills division (see related story).

“I believe the Horn River, geologic-wise, is the best shale play in North America,” Graham told attendees at Barclays Capital 2009 CEO Energy/Power Conference in New York City. “Some may argue, but if you look at the recovery rates, they are twice what the next shale play is.”

EnCana and drilling partner Apache Corp. have drilled around 40 wells (gross) in the play to depths of about 9,000 feet, Graham noted. Initial production (IP) rates averaged 8 MMcf/d one year ago; today the rates have declined to about 4 MMcf/d.

“That’s a very, very good decline rate,” Graham said. “Some of these big shale plays come off…80% or 90% in a year. The Horn River is a bit different. It’s got better geology and [wells] are only declining 50% in a year.”

Recent IPs over 15 days have come in at 9.5-11 MMcf/d, he said. On an estimated 350 sections in one block, “we’ve probably got about 300 Bcf per section, and we’re looking good.” Each well is expected to recover about 10 Bcf. “We can stay in this for a long time.”

At an estimated 500 Tcf of original gas in place (OGIP), the basin would rank third behind the Haynesville Shale, with an estimated 717 Tcf OGIP, and the Marcellus Shale, with an estimated 1,500 Tcf OGIP.

In addition to the Horn River Basin, BC’s Montney region is coming on strong, said Graham. EnCana is one of the leading leaseholders in that play as well. “Horn River is the best shale play, and the best gas play may be Montney.” EnCana has more than 700,000 net acres in Montney, with estimated OGIP of 70 Tcf.

“Some of our peers talk about the ‘Big Four’ [shales] in North America as the Haynesville, Marcellus, Fayetteville and Barnett, but it should be six plays, with two in Canada,” he said.

Low gas prices have stalled production, but a lack of infrastructure in the remote region also is an issue, Graham said. More infrastructure is being built, and EnCana also is supporting plans to export some of the region’s gas to Asian markets through Kitimat LNG Inc.’s proposed liquefied natural gas export terminal. Apache last month signed a memorandum of understanding to negotiate terminal supply, following one signed in July by EOG Resources Canada (see NGI, Aug. 17).

“It’s something we’ve been watching,” he said. “It’s a very viable project; they want to export about 700 MMcf/d from the West Coast to Asia, and [Kitimat LNG] is looking to lock up supply. We see some of the potential, and we like the project, and we’re working to get producers and end-users together. We think it’s going to go…but someone has to pay for it at the end of the day. I think it will wait on gas prices a bit, but eventually the project will get built.”

Graham said “there’s no question” that gas eventually “will displace oil, it will displace coal,” and he thinks gas prices will “move back into the band” to trade more favorably with oil. “It may take a year, but it will happen.”

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