Encana Lowers Drilling Costs By 18%, Lets Permits Expire

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Encana just had their 4Q2010 conference call this Thursday and gave some detailed info on how their Haynesville assets have performed in 2010 along with new directions the Company is heading for the current year.

Over the last quarter, Encana has added 1.3 Tcfe of reserves in the Haynesville Shale. The per well costs are said to be approximately $1 million but may go over that, specifically in this play. Overall production rates were averaged to be 410 MMcfpd as the Company closed out the year with 10 rigs in their multi well drilling pad. Drilling costs were lowered by 18% from the previous year.

During the call, members of Encana’s team stated that permits for 12,500 acres in the Haynesville expired prior to any work being done in the area. This is because the Company has come into better knowledge of the geology of the play and therefore decreased drilling projections that were made after the first half of the year. Below you can see a map I created in DrillingInfo of Encana’s production wells histogrammed by gas production in the past month and bubbled by cumulative gas production.

Encana Lowers Drilling Costs By 18%, Lets Permits Expire

The main direction Encana is hoping to go with the Haynesville Shale is to transition the field from a land retention strategy play to a gas factory (multi-pad drilling) play. The Company plans to drill in higher quality areas of the reservoir and stay away from more complex areas (zones with high clay content) until better geological data has been accumulated. The complex areas are mainly in the eastern part of the basin where there is much faulting taking place and also high pressure and temperatures in the reservoir. Encana is very sure that their long term production of the Haynesville will be over 1 Bcfpd.

Keep up to date with all Haynesville activity in the DNA section of the DrillingInfo site.

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