OT right now but maybe of interest in the future?
Chevron discovers major gas well in NWT
Called among biggest finds in Canada,
suggesting increase in oil, gas activity in far north
Wednesday, May 12, 1999
STEVEN CHASE and BRENT JANG
Alberta Bureau
Calgary -- Chevron Canada Resources Ltd. and partners say a recent well they drilled in northern Canada is one of the country's most productive natural gas discoveries.
Analysts say the find heralds an increase in activity above the 60th parallel by senior oil patch players.
K-29, as the well is called, is located 25 kilometres northwest of Fort Liard in the Northwest Territories. Fort Liard is about 30 kilometres north of the British Columbia-NWT border. It was drilled to a depth of 3,040 metres at a cost of $16-million.
The estimated production rate of raw, natural gas from the well is 70 million to 100 million cubic feet a day.
"This rate places the well in the top one-tenth of 1 per cent of all wells drilled in Canada," Calgary-based Chevron Canada Resources said in a statement yesterday.
It's a unit of San Francisco-based Chevron Corp., which is said to be in merger talks with fellow oil giant Texaco Inc. of White Plains, N.Y.
Chevron's statistics are based on a study of 74,000 gas wells drilled in Western Canada since record-keeping began.
Not all of the raw production will be usable, but analysts estimate that after "shrinkage," to account for non-combustible components like carbon dioxide, the eventual gas production could be 80 to 90 per cent of the estimated 70 million to 100 million cubic feet a day.
By comparison, the typical deep-gas well in Western Canada delivers between two million and three million cubic feet a day, according to the Canadian Association of Petroleum Producers (CAPP) in Calgary.
That means K-29 could produce about 30 times the typical deep gas well if it holds up.
Chevron said it uncovered an estimated 400 to 600 billion cubic feet of total raw gas reserves in the vicinity of the well. The amount of gas that will be recoverable will be less than that. Raw gas refers to gas before it is processed and placed in a pipeline.
Companies don't generally know if a well can sustain production rates until after about one year of operation. However CAPP's manager of research, Stephen Rodriguez, said it's unlikely Chevron would be trumpeting its success without good reason. "Chevron is not the type of company that goes overboard."
The announcement comes as expectations for Western Canadian natural gas prices are surging. Gas is expected to average around $3 for 1,000 cubic feet in 2000 as production lags behind demand. The addition of large new pipelines to U.S. markets, such as the Alliance Pipeline Ltd. project, are making it attractive for Canadian energy companies to produce as much gas as possible.
Analysts predict this combination of factors will lead to a surge of activity in the NWT as capacity is added in northern British Columbia.
"What you're going to see in the coming five years is a dramatic increase in activity in the Northwest Territories. How can any big oil company ignore this development?" said Wilf Gobert, an analyst at Peters & Co. Ltd. in Calgary.
Peter Linder of CIBC World Markets in Calgary said producers have only scratched the surface in the Fort Liard area. The discovery "has clearly established a major new gas region."
Chevron Canada operates the well on behalf of its partners and has a 43.43-per-cent interest in K-29.
Its partners include Purcell Energy Ltd. with 24 per cent; Berkley Petroleum Corp. with 21 per cent; Anderson Exploration Ltd. with 4.1 per cent; and Paramount Resources Ltd. with 2.76 per cent.
Chevron Corp. shares gained $1.13 (U.S.) to close at $98.01 on the New York Stock Exchange yesterday.
Separately, industry observers say a possible merger between Chevron Corp. and Texaco Inc. would have little impact in Canada. They say Chevron Canada would barely notice the addition of Texaco Canada Petroleum Inc. to its assets.
|
