Barnett Shale Texas
Drilling a horizontal well into the targeted portion of the shale is relatively quick, averaging about 15 days. The initial two horizontal wells were drilled to a measured depth in the targeted Huron Shale of approximately 6,400 feet, which included a lateral section of approximately 2,500 feet. Drilling activity has increased between 8 and 10 new producing wells per month, generating more than 1 million cubic feet per day of natural gas production. Drilling is scheduled to be complete later this week to the target measured depth of 12,615 feet. After drilling is complete, the well will be logged and analyzed.
Drilling and completion work on 14 wells ? Production set to rise significantly by year-end ? Drilling of the development wells is expected to commence next year. Drilling operations recently began to obtain core samples necessary to complete the FERC 7C application, which is currently anticipated to be filed in August 2008. Pending regulatory approval, the first cavern is projected to go into operation by mid 2011, with the other two caverns in operation by 2012 and 2014.
Gas in-place is the total amount of free and adsorbed gas within the Marcellus. Given a resource that is found under more than 34,000,000 acres of real estate with at least 50 feet of organic-rich section, the Marcellus Shale weighs in with more than 500 trillion cubic feet of gas in-place spread over a four state area. GasHub’s tests stations are lower cost options for many countries, such as China, which have large, emerging needs for alternate energy. Hundreds of universities throughout the world are also engaged in fuel cell research, but must deal with the reality of limited budgets when it comes to equipment purchases. Gas was up 5%, some 87 million a day. It was in the middle of our guidance.
Production from the 20-acre infill drilling program should resume in the near-term. Production potential is estimated at 1,200-1,400 barrels per day. The Williston basin represents one of the largest North American oil finds in history. Production during the second quarter of 2008 is estimated to be 6.10 Bcfe (67 MMcfe/d), or 45 percent above the 4.2 Bcfe (46.2 MMcfe/d) of production in the second quarter 2007. This is about 6 MMcfe/d, or 8%, below Carrizo’s second quarter production guidance and is primarily attributable to gathering line easement delays associated with bringing five new Barnett Shale wells on line (total estimated impact 11 MMcfe/d initial net rate) and with bringing Carrizo’s two Gulf Coast area LL&E development wells on line in Lafourche Parrish, Louisiana (total estimated impact 3.5 MMcfe/d initial net rate).
Production in the polymer pilot wells during the fourth quarter increased by 50% when compared to production on those well before the polymer flood began. Production flow is up the casing due to tubing shortages. As of July 21st, gas sales have stabilized at approximately 320 Mcf per day with a flowing casing pressure of 350 psi on a 30/64″ choke.
Cash flow was strong driven by higher netbacks after hedging and increased production. EnCana achieved cash flow per share on a diluted basis of $3.85, up 16% compared to the same quarter in 2007 and well ahead of street consensus. Cash flow from operations is a non-GAAP term that represents cash generated from operating activities before changes in non-cash working capital and other and excludes items of a non-recurring nature. We consider it a key measure as it demonstrates our ability and the ability of our business segments to generate the cash flow necessary to fund future growth through capital investment and repay debt.
Natural gas is also important to our domestic food supply. The vast majority of fertilizer used in agriculture is ammonia-based, and you need natural gas to manufacture ammonia. Natural resources and mining added 38,000 jobs nationally (up 5.3 percent), including 14,000 in Texas (up 6.8 percent). But even on that score, Texas benefits disproportionately.
