PanCanadian Petroleum Ltd. and MGV Energy Inc., the Canadian subsidiary of Quicksilver Resources Inc., are formalizing their coalbed methane (CBM) joint venture by drilling their first pilot wells beginning this fall in the largest Canadian CBM project to date. So far, the companies have drilled 21 exploration wells and plan to drill another 29 more in a region of southern Alberta, focusing initially on a million-acre tract in the Palliser block.

Because of their exploratory success to date, the companies, which began their CBM joint venture last November (see Daily GPI, Nov. 2, 2000), also doubled their capital spending this week, earmarking more than C$30 million, up from C$15 million. PanCanadian said the pilot wells follow a common method to extract CBM, and will drill a group of wells near the exploratory wells that appear promising.

Asked if the exploratory success so far could draw a parallel to CBM success in Wyoming’s prolific Powder River Basin, Quicksilver CEO Thomas Darden told NGI that the Alberta acreage, 100% owned by PanCanadian, was “a bigger playground, but we don’t know at this point if it will be as productive.” He said the companies had “high hopes that what we are seeing has wide applicability because so far, the results have been very encouraging.”

Once the pilot phase begins, Darden said the companies would expand their focus and begin exploratory drilling outside the Palliser block.

Gerry Protti, PanCanadian’s senior vice president of New Ventures, said that the joint venture had a “world class team of technical experts” assembled to allow it to “proceed aggressively.” He said the team, along with PanCanadian’s “strong asset base,” would give the companies an efficient way to exploit their prospects.

MGV’s CEO Mike Gatens said that the decision to progress to the pilot stage was encouraged by the exploratory drilling so far, and said the “upcoming pilot program represents the first set of multiple pilots drilled in Canada as part of a commercial venture.” Parent company Quicksilver is headquartered in Fort Worth.

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