September 2015
ShaleTech Report

ShaleTech news

ShaleTech news
Emily Querubin / World Oil

Encana Corp. sells natural gas assets for $850 million

Encana Corporation’s subsidiary, Encana Oil & Gas (USA) Inc., reached a sales agreement for its Haynesville natural gas assets in northern Louisiana. The company will sell all assets to GEP Haynesville, LLC, a JV formed by GeoSouthern Haynesville, LP. In addition to the $850 million transaction, Encana will transport and market GeoSouthern’s Haynesville production on a fee-for-service basis for the next five years. The natural gas assets being sold include approximately 112,000 net acres of leasehold, approximately 300 wells, as well as additional fee mineral lands. Collectively, this represents Encana’s entire position in northern Louisiana.

Joint study begins on shale technology for B.C. projects

Japan Oil, Gas and Metals National Corporation (JOGMEC) and INPEX Corporation have commenced a joint study on technology relating to shale gas development in the Horn River, Liard and Cordova areas in British Columbia, Canada, with INPEX Gas British Columbia Ltd. (IGBC) and Nexen Energy ULC. By analyzing rock samples extracted from shale reservoirs marked for development, the geological characteristics of the areas can be thoroughly evaluated. The data obtained from the shale gas development and production operations undertaken by Nexen and IGBC will help boost the development of shale gas reservoirs in those areas. The selection of rock samples to be analyzed has already been completed, and the four companies began their analysis in July. The study is expected to continue for approximately one year.

An integrated software suite for unconventional shale plays

A Halliburton business line, Landmark, now has an integrated software suite designed specifically for unconventional shale plays. The software enables operators to integrate and share available GIS, geologic, geophysical and engineering data to work collaboratively across the exploration, appraisal and field development, and development and production phases. According to Landmark, the software helps steer well paths and analyze field history more rapidly. Additionally, it consolidates data into a single database, where it can be shared among various teams and projects.

UK government announces dedicated planning process for shale gas

Shale gas planning applications will be pushed forward through a new, dedicated planning process, under measures announced by Energy and Climate Change Secretary Amber Rudd and Communities Secretary Greg Clark. After making it clear that shale is a national priority, which helps move the UK to a low-carbon economy, ministers are ensuring that shale applications can’t be foiled by slow and confused decision-making amongst councils. Measures include calling-in on a case-by-case basis, identifying councils that repeatedly fail to determine oil and gas applications within the 16-week statutory timeframe requirement, adding shale applications as specific criterion for recovery of appeals, and ensuring planning call-ins and appeals involving shale applications are prioritized. Additionally, new sovereign wealth fund proposals are scheduled to be presented later this year, which may require communities hosting shale gas developments to share in the financial returns generated.

Packers Plus, Acacia unite to license multi-zonal completion technology

Packers Plus Energy Services Inc. and a subsidiary of Acacia Research Corporation are collaborating on the licensing of a set of fundamental patents. These patents are related to multi-zonal completion of horizontal wells, including ball drop, sliding sleeve and packer technology, for use in the hydraulic fracturing of both tight and conventional oil and gas reservoirs. Oilfields across North America, and worldwide, have already applied this technology with significant contributions to the growth in oil and gas production from unconventional shale formations.

Exxon Mobil carries out agreements to increase position in Permian basin

Two agreements to obtain horizontal development rights in 48,000 acres in the core of the Midland basin have been executed by Exxon Mobil Corporation. The acreage is to be operated by the company’s subsidiary, XTO Energy Inc. The agreements include an acquisition and farm-in adjoining XTO’s existing acreage position in Martin and Midland Counties, providing rights to all intervals within the basin. Exxon Mobil has fulfilled five agreements in the Midland basin since Jan. 2014, giving the company more than 135,000 operated net acres. "We are continuing to grow our position in a prolific area of the Permian basin," said Randy Cleveland, president of XTO Energy. "The recent emergence of strong Lower Spraberry results, combined with the established Wolfcamp intervals, demonstrates the significant potential of the stacked pays in the Midland basin core."  Additionally, XTO is currently operating 11 horizontal, and four vertical rigs across its Permian basin leasehold of more than 1.5 million net acres, with net oil-equivalent production exceeding 115,000 bpd.

EIA predicts natural gas decline in major shale regions

According to the U.S. Energy Information Administration (EIA), production from the seven major shale formations of the U.S.—which include the Bakken, Niobrara, Permian, Eagle Ford, Haynesville, Utica and Marcellus—is projected to decrease for the first time in September 2015. In each region, production from new wells is not great enough to offset production declines from many of the existing, legacy wells. Each month, new well production depends on the number of drilling rigs, as well as the productivity of those rigs. As rig counts decline, significant increases in rig productivity are necessary to compensate for the reduced rig count, as well as for the rising levels of legacy well declines. Given the recent drop in rig counts and the decline in production from legacy wells, productivity increases are unlikely to completely offset the downturn.

WPX Energy secures presence in Permian area's Delaware basin

WPX Energy has successfully closed the purchase of privately held RKI Exploration & Production, LLC, securing their position in the Permian’s Delaware basin. The acquisition includes approximately 22,000 boed of existing production, approximately 92,000 net acres, more than 3,600 gross risked drilling locations across stacked pay intervals, as well as more than 375 mi of scalable gas-gathering and water infrastructure. Assets have existing production from 10 of 12 prospective benches in a 9,000-ft, hydrocarbon-charged stratigraphic column, which includes the Wolfcamp, Bone Spring, Avalon and Delaware Sands intervals. 

North Dakota severance tax revenue relies heavily on shale

As the second-largest oil-producing state in the U.S., North Dakota’s reliance on severance tax revenues has increased significantly with the growth of tight oil production in the Bakken region. In 2001, severance taxes accounted for 14% of state tax revenues, then grew to 54% by 2014. This year, the state passed legislation to revise its severance tax structure in response to low oil prices. The legislation will reduce the oil extraction tax from 6.5% to 5%, beginning in January 2016. It will also repeal existing statutes that elicit severance tax reductions when oil prices settle below a reference price of $55/bbl for several months.

Eagle Ford production expected to reach 2 MMbpd in 2020

According to Wood Mackenzie’s North America key play analysis, production growth in the Eagle Ford is expected to continue, despite the downturn. The analysis, which divided the Eagle Ford into nine sub-plays, shows that core areas are still some of the most desirable oil and gas investment opportunities worldwide. Production is said to slow in the near term, but lower oil prices are diluted by improved recoveries as operators retrench to the core areas. Research Analyst Lower 48 Upstream Oil and Gas at Wood Mackenzie, Jeremy Sherby said, “We still believe that the Eagle Ford will hit 2 MMbpd of oil and condensate production in 2020, but the path to get there will be different.” The analysis further suggests that three of the nine sub-plays account for approximately 75% of the play’s remaining NPV10, and will be the source of much of the expected growth. Sherby said, “The  Eagle Ford has an enviable position as it continues to outperform other shales, and remains the focus of Lower 48 tight oil development spend in 2015.”

Schlumberger assesses Horse Hill licence area

Schlumberger has independently calculated a mean Oil in Place (OIP) of 10.993 Bbbl within the 55 mi2 of the PEDL137 and PEDL246 Horse Hill licences in the Weald basin, in southeast England. The tight Jurassic limestones and shales of the Kimmeridge Clay formation in the licence area are deemed to contain a total OIP of 8.262 Bbbl, and the shales of the Oxford Clay and Lias formations containing a cumulative OIP of 2.731 Bbbl. This analysis builds on the company’s previous petrophysical evaluation of the Horse Hill-1 well, which determined a mean OIP of 255 MMbbl per mi2. The current report incorporates the analysis of nine additional wells in, and beyond, the licence area.

Vorpal Energy Solutions collaborates with Enventure Global Technology

Vorpal Energy Solutions and Enventure Global Technology have announced a strategic collaboration to power their respective technology, and to aid the industry in harnessing and expanding the refrac market. Vorpal’s Drill2Frac technology, which is a new approach to improving recovery in unconventional plays, is a patent-pending, low-cost completions approach that improves recovery by offering quick insight into lateral heterogeneities along the wellbore trajectory. It can aid in the optimization of fracturing operations through optimal placement of perforation clusters. Enventure’s expandable ESeal Refrac liner is an effective way to provide zonal isolation of existing perforations and internal pressure integrity that enable greater predictability of planned fracture stages. The collaboration of these two technologies can provide identification and isolation of target zones, enhancing total recoverable reserves.

Armour Energy agrees to joint, $100 million project with AEP in Australia

Armour Energy Limited has fulfilled a non-binding letter of intent (LOI) with American Energy Acquisitions LLC, an affiliate of American Energy Partners, LP (AEP). Aubrey McClendon, wildcatter and A&P LP's CEO, is once again leading the way in the search for shale. Under the LOI, AEP and Armour will jointly further the exploration and development of Armour’s McArthur basin project in the northern territory of Australia, a 34-million-acre project. The project area also includes the Glyde prospect, where Armour flowed 3.3 MMcfgd from the Coxco Dolomite in 2012. Both parties will work toward execution of definitive agreements within three months, but are subject to up to three extensions.

W&T Offshore, Inc., reaches deal on Permian basin assets

Ajax Resources, LLC, and Kelso & Company are entering an agreement with W&T Offshore, Inc., to acquire interest in the Yellow Rose field in the Permian basin. In July, the field produced an approximate average of 3,000 boed. The $376.1 million agreement will give W&T the right to retain a 1% to 4% sliding scale residual overriding royalty interest in the field. Assets include approximately 25,800 adjoining net acres in Andrews, Martin, Gaines and Dawson counties. Ajax, a new, Houston-based company, is expected to greatly benefit from extensive well control with more than 200 wells drilled, and currently producing throughout the property. The transaction is scheduled to be complete during the third quarter of 2015, with an effective date of Jan. 1, 2015.

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Emily Querubin
World Oil
Emily Querubin
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