[Bond James Bond]

Maybe this could turn Yakima into an energy boomtown! :banana:

http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11398F2796352670&p_docnum=2

PUBLISHED ON August 18, 2006
Columbia Basin could hold huge natural gas reserves

By LEAH BETH WARD YAKIMA HERALD-REPUBLIC

A Denver-based petroleum company with significant mineral rights in the Columbia Basin says drilling results so far at an exploratory well near Mattawa indicate the region could hold significant reserves of natural gas.

"There are many different estimates out there, but the reality of the situation is this basin, in all likelihood, represents the possibility of being able to prove up in the tens of Tcfs (trillion cubic feet) reserves if not possibly in the hundreds of Tcfs reserves," Roger Parker, chief executive officer of Delta Petroleum, said Wednesday at an annual oil and gas industry conference in Denver.

If volumes ever approach those levels, the region would rank among the most productive in the nation, alongside or exceeding such hot spots as the Jonah Field and Green River Basin in Wyoming and the Piceance Basin in Colorado.

Parker's comments were available from a replayed Internet broadcast of the conference.

The Mattawa well described by Parker was drilled by EnCana Oil & Gas USA, a Canadian company with U.S. headquarters in Denver. EnCana has leased 800,000 acres in the basin. Delta has an interest in the Mattawa well and another outside Sunnyside.

In 2002, the United States used about 22.8 Tcf of natural gas, making it one of the world's largest consumers of the fuel, according to the federal Department of Energy. A trillion cubic feet of natural gas can heat 15 million homes for one year.

Dave Donegan, Delta's spokesman, said Thursday that Parker's remarks at the conference could be characterized as cautiously optimistic.

"That's a fair assessment," he said.

Delta is not drilling in the Columbia Basin yet, but Parker said it's planning to start later this year or early next year. The company has leased the mineral rights on about 400,000 acres in the region, which state geologists say is the largest unexplored area within the United States.

EnCana has completed one exploratory well, known as the Anderville Farms 1-6 well, on a private farm in the Saddle Mountains east of Mattawa and is nearing completion at a second site eight miles north of Sunnyside in the Rattlesnake Hills. A third well is planned, but company officials haven't revealed a location yet.

EnCana USA President Jeff Wojahn told analysts last month that the company plans to conduct completion studies in the third quarter of this year, with results known sometime in the fourth quarter.

Completion studies have a strict definition in the natural gas business, explained Bill Lingley, lead geologist with the state Department of Natural Resources. The well operator runs the equivalent of a pistol down the well casing and shoots holes through the metal into a potential gas zone. If a fluid forms, it's likely to be gas condensate, a sign of natural gas.

The plan for completion studies means EnCana is encouraged enough to spend at least another $250,000 at the site, said Lingley.

"When I hear completion studies, I perk up. That means the operator is putting his money where his mouth is," he said.

EnCana, as is customary in the speculative business of exploration, is not ready to call the venture a success.

Company spokeswoman Wendy Wiedenbeck said in a telephone interview that it will be sometime next year before it can determine the results of its exploratory program.

If the completion studies are positive, the company will seek permits for delineation wells, which are drilled away from the original location in an efforts to find out how large and prolific the field might be.

Geologists have believed for some time that the Columbia Basin is rich in hydrocarbons. In the early 1980s, a partnership of Shell and Arco hit a reservoir that showed impressive initial pressure. But drilling technology at the time made further exploration in the region's notoriously stubborn basalt layers too expensive.

Parker, the Delta CEO, referenced the Shell experience in his remarks.

"The main thing to say about the Columbia River Basin at this point in time, the geologic theory that we've all kind of operated under here for the last couple years, and really was identified by Shell 25 years ago, has been confirmed, if you will, with another well," Parker said, referring to the well near Mattawa.

"We believe we have encountered what we had hoped to encounter prior to drilling the well and we will be very interested to see what actual completion results are as we go into the remaining part of this year."

 

[Phriggin' Ogre]

I know that I'm a bit late on this thread, but... as much as I'd wish for Yakima to be an energy boom town, I think that most of the energy revenue would be diverted to the Tri-cities, unfortunately.

 

[Bond James Bond]

LOL, I totally forgot I had also posted this article here.

Here's an update article from the Spokane Journal:

http://www.spokanejournal.com/spokane_id=article&sub=2967

Promising gas well fuels interest
Exploration group claims shaft in Columbia Basin confirms earlier findings
By Richard Ripley

Interest in natural-gas drilling in Eastern Washington has shot up after an exploration company executive said a drilling project near Mattawa, Wash., confirmed that the Columbia Basin holds natural gas in a potentially productive type of geologic formation.

The executive, Roger Parker, CEO of Delta Petroleum Corp., of Denver, made the comments at an oil and gas conference in Denver Aug. 17. Afterwards, on Oct. 25, both Delta, which is a partner in the drilling project, and the project operator, EnCana Oil & Gas Inc., also of Denver, said that “completion” activities would begin at the project. In industry parlance, that means a driller, after sinking a shaft, has seen enough encouraging signs to go to the added expense of putting casing in the well and performing testing to see if the well will be a commercial producer.

“I’m told that it’s the most watched well in the whole oil and gas industry,” Eric Nuttall, a research analyst with Sprott Asset Management Inc., of Toronto, which is an investor in Delta, says of the well, named the Anderville Farms 1-6.

The Columbia Basin long has been believed to hold large amounts of natural gas sealed beneath thick layers of basalt, and the news that completion work was being done at the Mattawa well was met with keen interest. Mattawa is northwest of the Hanford Nuclear Reservation.

On Oct. 26, the Washington state Department of Natural Resources logged “spectacular results” in an auction of drilling leases in Eastern Washington, says William S. Lingley Jr., the department’s chief geologist. He cautions that industry has to test an area extensively before it can determine whether it’s commercially viable to develop a gas field. While no one knows precisely how big the Columbia Basin geologic formation is, “most people think it extends … to somewhere west of Ritzville,” Lingley says.

The Web site Financial Sense Forum says that in the Denver conference, Parker said, “The geologic theory that we’ve all kind of operated under here for the last couple of years, and really was identified by Shell 25 years ago, has been confirmed, if you will, with another well. We believe we have encountered what we hoped to encounter prior to drilling the well, and we will be very interested to see what actual completion results are as we go into the remaining part of this year.”

Says Lingley, “What they said in effect was that they had achieved what they set out to do when they drilled this ‘wildcat.’”

He adds, “It’s of possible national significance.” That’s because the Columbia Basin could hold “overpressured” natural gas trapped in sandstone in what’s called a basin-centered accumulation, Lingley says. He says that in such accumulations, sandstone becomes charged with gas in the deepest parts of geologic basins. As woody fossil material undergoes conversion into gas, the gas gets driven out into the sandstone, where it can accumulate in great volumes under pressure.

Large volumes of gas were found in British Columbia 25 years ago in similar geologic formations, Lingley says. Today, those accumulations produce 18 billion cubic feet of natural gas per day, or nine times as much as the entire Northwest gas market, including Vancouver, British Columbia, consumes daily.

The technology the Canadians used to extract that gas was kept secret for some time, but now is being employed in gas fields in southwest Wyoming, Lingley says. He says the oil and gas industry is looking throughout the world for geologic formations that are similar to the ones in British Columbia, “and it turns out the Columbia Basin is a very good look-alike.”

In his comments in August, Parker said, “There are many different estimates out there, but the reality of the situation is this basin, in all likelihood, represents the possibility of being able to prove up in the tens of Tcfs (trillions of cubic feet) reserves if not possibly in the hundreds of Tcfs reserves.”

Yet, because it costs so much to develop gas fields, the chances still are remote that gas from the Columbia Basin ever will be brought to market, Lingley says.

Steve Chamberlain, president and founder of Energy Investments Inc., of Golden, Colo., which has been buying Columbia Basin drilling leases since 1998, says, “Our opinion is that we’re cautiously optimistic. We’ve been working on this for a long time. We’ve always felt that there was gas there. The question is, is it economic to develop?”

In the Columbia Basin, drillers must penetrate thick formations of hard basalt to reach the sandstone, and such drilling is costly, he says. As for development, Chamberlain says, “It depends on what kind of sandstone you find up there. If you find a beach,” or the equivalent of beach-like loose sand underground, “the gas can travel a long way” and be extracted with relatively few wells. “If you find ‘tight’ gas, and that’s what they expect to find, it’s going to take a lot of wells to develop the gas.”

Delta Vice President David Donegan says the Columbia Basin’s great distance from oil and gas producing areas would increase development costs. “It is so far from oil and gas producing provinces, all services are very remote. You’re going to have to move crews and drilling rigs from Wyoming or the San Juan Basin, in California. Until we get these wells completed, we don’t know whether we’re going to develop the gas.”

Completion activities in a well in a hard sandstone formation involve setting off numerous carefully targeted explosions to perforate the well casing and begin to form channels into the sandstone, Donegan says. Hydraulic fluid, or hydraulic fluid and sand, then is pumped into the channels under great pressure, fracturing the rock—sometimes for hundreds or even thousands of feet—and creating pathways through which the gas can flow into the well’s bore hole.

“It’s brute force to a certain degree, but it’s very scientifically designed,” says Donegan. He says the rock can be so hard it’s “like a tombstone.” In such deep formations, gas typically is “overpressured” because the basalt has sealed the basin for thousands of years, and the pressure helps the gas flow out of earth, he says.

In a conference with investment analysts in Calgary, Alberta, on Oct. 25, Jeff Wojahn, president of EnCana, said he believed that completion activities at the Anderville Farms well would be wrapped up in about a month. He added, “Now, just because they’re completed doesn’t mean it’ll follow up necessarily with an announcement.” EnCana’s parent company is based in Calgary, and it’s governed by Canadian securities law when it comes to what it must disclose, but Delta Petroleum, which is governed by U.S. securities law, will have to weigh separately whether to announce the results.

EnCana is drilling a second well, the Anderson 11-5, near Sunnyside, Wash., which is south of Mattawa, and also has obtained a permit for a third well, the Brown 7-24, which is to be sunk a few miles from the Anderville Farms well. Delta, which also has an interest in the Anderson and Brown wells, says drilling at the latter well is expected to begin within the next several months.

Shell Oil Co., of Houston, also has an interest in the three wells, says spokeswoman Kelly Op de Weegh. “Shell has an agreement under which it will earn some of the acreage” EnCana has under lease in the basin, Op de Weegh says. The agreement provides that after the results from the first wells are known, EnCana and Shell would divide those leases and operate them “together or separately,” she says.

“The results won’t be known until next year” from the first three wells, she says. “There’s been no production turned on line. It’s early days.”

EnCana says on its Web site that it has drilling leases on 845,000 acres in the basin. Shell says it has about 40,000 acres under lease there. Delta has 440,000 acres under lease.

Like the Anderville Farms well, the Anderson and Brown wells will be 14,000 feet deep. Meanwhile, Delta also plans to drill three wells of its own. It expects to start the first, in Klickitat County, near the Columbia River, and perhaps also the second next year, Donegan says.

The gas industry long has thought that the Columbia Basin holds deposits of hydrocarbons. Donegan says that in 1913, the Conservative Land Investment Co., of Spokane, found gas while drilling for water in the Rattlesnake Hills, which lay between Mattawa and Sunnyside. That field didn’t go into production until 1929, but served Yakima until 1941 with gas supplied via a wooden pipeline.

In the 1980s, a partnership involving Shell drilled in the basin, and two of the drills that were drilled were especially promising. Yet, Op de Weegh says, gas prices were low then, and “back in the ’80s, there just wasn’t the drilling technology and the completion technology to drill economically.”

While the jury is still out on whether the oil and gas industry will develop gas fields in the Columbia Basin, it’s investing heavily in drilling rights.

“In our last auction, our revenues were $4.5 million,” Lingley says. “Our high was $506 an acre. Our average revenue was $62.14 an acre. Both of those are records” by a wide margin, he says. He believes that the industry might have spent as much as $200 million in the latest phase of exploration, he says.

The payments, which go into the state’s trust funds for schools, give the industry the right to drill within a certain time; commercial extraction would result in additional revenue for the state.

Chamberlain recalls that he bought leases in the basin in 1998 for $2 an acre, and says gas development could pay big bonuses in Washington.