Fields

It might seem that the Eagle Ford and Marcellus shales are being developed at breakneck speed, but it’s important to remember that these are the early days in two resource plays that will be natural gas breadbaskets for the nation in the decades to come.

Chief Oil & Gas LLC, which in 2005 was the second largest natural gas producer in the Barnett Shale, is showing it can do the same in the Marcellus Shale, reporting that output in Pennsylvania has reached the 100 MMcfe/d mark from 42 wells.

Using the experience it gained in the unconventional gas fields of the Piceance Basin in Colorado, and the Montney and Horn River shale plays in British Columbia, Encana Corp. has begun to advance its “gas factory” approach in the Haynesville Shale, where it holds more than 430,000 net acres spread across Louisiana and East Texas.

Royal Dutch Shell and IBM Corp. announced a research collaboration that aims to extend the life of oil and natural gas fields. Shell said the project, which will explore advanced techniques for reconciling geophysical and reservoir engineering field data, has the potential to reduce the time and money required to model reservoirs. An enhanced mathematical optimization solution resulting from the collaboration would improve the cost-effectiveness of the data inversion process and would become part of Shell’s proprietary reservoir modeling tool kits for application in new oil and natural gas developments, as well as existing assets, Shell said. IBM and Shell research scientists will work in several laboratories in both the United States and The Netherlands.

Royal Dutch Shell and IBM Corp. announced a research collaboration that aims to extend the life of oil and natural gas fields. Shell said the project, which will explore advanced techniques for reconciling geophysical and reservoir engineering field data, has the potential to reduce the time and money required to model reservoirs. An enhanced mathematical optimization solution resulting from the collaboration would improve the cost-effectiveness of the data inversion process and would become part of Shell’s proprietary reservoir modeling tool kits for application in new oil and natural gas developments, as well as existing assets, Shell said. IBM and Shell research scientists will work in several laboratories in both the United States and The Netherlands.

CIG said it “is beginning to see some progress in achieving balance in its storage fields,” but the Ft. Morgan and Latigo facilities “continue to operate above the storage guidelines.” Therefore the previously announced Strained Operating Condition, OFO and Underperformance Caps will remain in place until further notice, CIG said, adding that it will update its assessment of operating conditions for the upcoming weekend no later than 2 p.m. MDT Thursday.

Two of Southern California Gas Co.’s (SoCalGas) underground natural gas storage fields in the greater Los Angeles metropolitan area were honored with “Outstanding Lease Maintenance Awards” by the California Department of Conservation’s oil, gas and geothermal resources Ventura Division. The awards were announced by the Los Angeles-based Sempra Energy utility. SoCalGas’s 100 Bcf-plus Aliso Canyon storage site in the north end of the city’s sprawling suburban San Fernando Valley was honored by the state for the 25th consecutive year; the other facility, Honor Rancho, near Valencia beyond the norther boundaries of the San Fernando Valley, was honored for the 23rd consecutive year. The utility said the state has informed it that a third storage facility, Playa del Rey, located in the load center of Los Angeles near the Pacific Coast, will also receive an award. Last year, SoCalGas earned three of 37 lease maintenance awards from the state department’s oil/gas division. Aliso and Honor Rancho were developed in the 1970s; Playa del Rey dates back to the mid-1940s.

Apache Corp. has completed its previously announced acquisition of nine Permian Basin oil and gas fields with current net production of 3,500 boe/d from Marathon Oil Corp. (see Daily GPI, May 1). Apache paid $181.1 million, reflecting closing adjustments based on the Jan. 1 effective date of the transaction. Apache acquired Marathon’s company-operated assets located in Lea County, NM, and Reagan, Howard and Sterling counties in Texas, as well as Marathon’s interests in the Chenot/Putnam area in Pecos County, TX. The properties have a current net production of 10 MMcf/d of natural gas, 1,332 b/d oil and 524 b/d of natural gas liquids. “Of the acquired properties, approximately 75% of the proved reserves and 61% of the current production directly offset the Apache-operated Northeast Drinkard Unit in Lea County, NM,” said John Crum, president for North America. When Apache started downsizing well-spacing at the Northeast Drinkard Unit from 16 wells per square-mile section to 32 wells per section, field production grew from 700 b/d to 2,000 b/d. The newly acquired properties have 16 wells per section. Prior to the acquisition, Apache’s net production in the Permian Basin was 34,500 b/d of oil and 86 MMcf/d of gas.

Occidental Petroleum Corp. (Oxy) has agreed to acquire the interest it didn’t already own in some Permian and Piceance basin fields from Plains Exploration and Production Co. (PXP) for $1.29 billion. The transaction frees up cash that would allow PXP to develop its joint venture with Chesapeake Energy Corp. in the Haynesville Shale (see NGI, July 7). The Oxy agreement, which is expected to close by the end of the year, follows transactions announced late last year in which Oxy paid PXP $1.55 billion for half stakes in the West Texas and Colorado plays (see NGI, Dec. 24, 2007). The Permian and Piceance assets currently have net production of around 52 MMcf/d of gas and 4,300 bbl of liquids, or 13,000 boe/d. The properties have about 92 million boe of proved reserves weighted 69% to gas. About 45% of the properties are developed. In the first six months of 2008 Oxy produced more than 50 MMcf/d in the Piceance Basin. The Los Angeles-based producer said that with the PXP purchase, gas output would grow to at least 200 MMcf/d by 2010. Oxy’s net acreage position in the Piceance Basin now totals 129,000 acres.