Has all the elements for success
Deep Bossier A Long-Life Asset
During 2008, the mainstream press and many energy industry financial analysts apparently viewed unconventional shale plays as the greatest thing to come along since sliced bread and cold beer.
The considerable hype essentially obscured the fact that there’s other mighty hip – and lucrative – activity in the domestic arena.
For example, there’s excitement aplenty in East Texas, where operators are working fast and furiously to tap into the natural gas riches contained within the Deep Bossier play, which lies basinward of the Jurassic shelf edge.
The wells tap into the Deep Bossier at depths between 15,000 and 20,000 feet, where they intersect over-pressured shale and sandstones a few thousand feet thick.
This is treacherous – and expensive – drilling, but the payoff can be humongous.
Initial production rates of 20 MMcfg/d are pretty much the norm, with some of the wells coughing up more than 50 MMcfg/d.
Sitting squarely in the latter category are the Bonnie Ann 1 and the South McLean B1 wells in the Amoruso Field. They represent two of the nation’s five largest wells since 2002, with initial gross production rates exceeding 50 MMcfg/d, according to Amoruso Field owner/operator EnCana.
Amoruso Had an Idea …
The field originated via an idea and a concept developed by geologist and past AAPG President John Amoruso who has worked the East Texas area since 1963 (see related story).
Once Amoruso secured financing to go after the 43,000 acres of land he zeroed in on to acquire, the initial well went down in 2004.
The money came via investor Guma Aguiar who then formed Leor Energy to operate the first well in the field. They recognized early on what a challenging treasure trove they had tapped into and formed a joint venture with EnCana who initially acquired a 30 percent interest in the field.
The company eventually forked over $2.55 billion late in 2007 to acquire all of the Deep Bossier natural gas and land interests held by Leor.
The Leor acquisition included:
- Leor’s remaining 50 percent interest in the Amoruso Field.
- Daily gas production of about 75 million net cubic feet/day.
- About 26,000 net acres of land in Amoruso, centered in Robertson County about halfway between Dallas and Houston.
- About 9,100 net acres of offsetting land to the east at South Hilltop.
- About 20,600 net acres of other undeveloped lands in Robertson and Madison counties.
- Total East Texas land of about 56,300 net acres essentially undeveloped.
The acquisition increased EnCana’s total land holdings in the Deep Bossier trend to about 215,000 net acres.
The company recently announced it has cut back its shelf program in the general area while preserving most of its work in the Deep Bossier, particularly the Amoruso, with a 10-rig program in the works.
“Spectacular World Class Field”
EnCana has conducted extensive seismic mapping of the Deep Bossier, enhanced its technical understanding of the geology, optimized drilling targets, lowered well costs and improved recovery rates, according to Jeff Wojahn, the company’s executive vice president-USA region.
“In my opinion, the Deep Bossier might be the finest resource play in the entire industry in North America,” Wojahn declared. “The Amoruso is a spectacular world class field.”
Wojahn noted the Deep Bossier geological trend runs along the well-established Bossier shelf, which currently produces more than 1.4 Bcf/d of natural gas.
Besides its other holdings in the play, EnCana estimates the acreage acquired from Leor contains about 200 net well locations, with each deep overpressured well currently tallying about $10 million to drill, complete and tie in. Per well recovery is expected to range between eight Bcfg and 13 Bcfg. This translates into estimated ultimate recovery between 1.3 Tcf and 1.8 Tcf net after royalties.
Looking at the midpoint of this range, the company estimates full-cycle finding, development and acquisition cost of approximately $3/Mcf.
EnCana’s production from this East Texas resource play continues to ramp up rapidly.
“In the third quarter of November 2007, when we announced the Leor deal, we were producing 144 million a day from the East Texas play,” said Alan Boras, media relations manager at EnCana. “In the same third quarter a year later, production had more than doubled to 340 million, with the Amoruso accounting for a large part of that.”
Boras noted they anticipate a forecast to 420 million daily in 2009 for Amoruso and its other acreage in the play.
“This is an exciting long-life asset that is at the earliest days of development,” said Randy Eresman, EnCana’s president and CEO. “It has the potential to be the leading resource play in our North American portfolio.”
Excellent geology is not the only thing the Deep Bossier action has going for it – it’s located in a well developed oil and gas region that offers an established service sector, efficient state regulation and available midstream gas processing.
An added plus is the proximity to major pipelines having adequate transportation capacity and close to the country’s trading hubs, including the Henry Hub in Louisiana.
EnCana noted the asset’s location and infrastructure enables producers to capture some of the most attractive netbacks in North America.