Calgary-based Encana Corp. and Denver-based Bill Barrett Corp. are stirring up interest in New Mexico’s San Juan Basin, where they are working separately with area drillers to explore in the Mancos Shale.
An Encana spokesperson told NGI‘s Shale Daily on Monday the company has a team formed specifically to go after oil and natural gas liquids (NGL) in the Mancos with a local Farmington, NM, firm, Dugan Production Corp.
In contrast, a senior official with Bill Barrett downplayed her firm’s activity in the San Juan, saying “this is a little premature for us; we haven’t drilled anything yet.” Like Encana, however, Bill Barrett has lined up a local partner in the area, the executive said.
The Albuquerque Journal cited Barrett as the source of estimates for the New Mexico portion of the Mancos at 30 billion bbl. Barrett and its partner supposedly think there is at least 5% of the potential — 1.5 billion bbl — that can be economically recovered, the Journal reported. Barrett will drill two exploratory wells this fall, the newspaper reported, but the company did not confirm this.
In describing his company’s San Juan assets at an investors conference earlier this year, Encana’s Jeff Wojahn, executive vice president in its USA division, estimated 7.5 billion boe, primarily light oil and NGLs, from 174,000 net acres. The company has four producing wells and a fifth well being developed, Wojahn said.
Targets for Encana’s interest in the Mancos include a $4.3 million/well development cost, an estimated ultimate recovery (EUR) of 550,000 boe/well, drilling at the 5,500-foot level vertically and up to 5,000 feet laterally.
The local news attention for Encana and Barrett’s interest has been characterized as a “significant shift” for the gassy San Juan Basin, which has been hit hard by the combination of the economic recession and the shale gas boom in other areas, flooding the market with historically low-cost gas supplies.
According to the Journal report, New Mexico’s natural gas production has dropped to its lowest level in 20 years, decreasing 18% from 2007 to 2011. A dozen drilling rigs now operate in the San Juan area, compared to about 40 before the recession, the newspaper reported.
Local business and political interests now see the advent of $80-$100/b oil and the use of hydraulic fracturing as the chance for a turnaround in the San Juan through the Mancos Shale.
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