Questar Corp. received clearance to increase well density in the Pinedale Anticline lease in Wyoming and raised its estimates of the recoverable gas resources there. Questar now estimates that there is about 2.6 Tcf of proved, probable, possible and potential reserves in place, a net increase of about 314 Bcfe from estimates in December.

However, the play now is expected to take longer to develop because Questar will have to drill more wells to produce the gas while facing the same environmental restrictions.

It received authorization from the Wyoming Oil and Gas Conservation Commission (WOGCC) for 10-acre-density drilling (down from 20-acre) in the Lance and Mesaverde Formations which cover about 12,700 acres out of the 18,208 gross acres of Questar’s Pinedale leasehold.

“Our understanding of Pinedale’s Lance Pool reservoirs continues to evolve,” said Questar Market Resources CEO Charles Stanley. “In testimony before the WOGCC today, we presented data that indicate wells drilled on 20-acre density will only recover about a quarter of the estimated gas-in-place volumes, and that 10-acre-density wells will recover a little less than half of the in-place gas.

“The big change is not due to a revision in our estimate of individual well performance or reserves, but to a substantial increase in the estimated gas-in-place in the reservoir. There’s simply more potentially recoverable gas in the Lance Pool than we originally thought,” Stanley added.

After drilling seven 10-acre pilot wells, analyzing core samples and conducting extensive tests, the company believes that earlier estimates of the volume of gas-in-place in the Lance Pool at Pinedale were too low — by as much as a factor of two. It raised its estimate of probable reserves by more than 200% to 877 Bcfe.

The increase in estimated gas-in-place is due to lower indicated water saturations and recognition of lesser-quality reservoirs, including those comprised of very low-porosity sandstone as well as siltstone and shale, the company said.

The company previously estimated that about 470 wells at 20-acre-density would be required to fully develop the Lance Pool. Now it expects 932 wells on 10-acre density will be required to fully develop the pool. As a result, there will be a greater cost of development, but a Questar spokesman also said the wells drilled at tighter densities likely will be shallower and less expensive to drill.

“Unfortunately this really doesn’t speed up our development program,” said Questar spokesman Martin H. Craven. “We still are targeting 35 wells this year and 40 next year. We are going about as fast as we can. This gives us a larger inventory, but it doesn’t mean we will drill it any faster” because of environmental restrictions.

The company has committed to the development of the Pinedale lease through directional drilling to subsurface locations from a limited number of surface pads. “We believe we can drill 10-acre-density wells without increasing the total number of pads,” Stanley said. “There will be slight additional surface disturbance on each pad during the drilling phase because we’ll need to accommodate additional wellheads. But we will minimize pad size and surface disturbance by drilling the 10-acre-density wells now.”

A decision to defer 10-acre development would have resulted in more surface disturbance, he said. “Also, we can begin the reclamation process immediately after the wells are completed. The result should be less habitat disturbance at any given time, since we won’t need to maintain large pads for future drilling operations.”

Questar also said it believes cumulative air quality impacts will be significantly reduced from recent improvements in drilling efficiency gained from year-round operations. Additionally, continuous pad-drilling operations minimize the number of rig moves and associated truck traffic, dust, and emissions. The company is installing a water and condensate gathering and pipeline system at Pinedale that will eliminate up to 25,500 tanker-truck trips per year at peak production.

Questar currently is producing about 72 MMcf/d from the Pinedale area, which made up about 24% of its total production in the second quarter.

©Copyright 2005Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.