In the unconventional gas world, 'monsters' are relative

As monsters go, the White South #1H was pretty tame, even if it was reportedly the biggest well in what has become the US' biggest natural gas field.

The well, in the Barnett Shale near Fort Worth, Texas, was dubbed this week by the city's newspaper of record, the Star-Telegram, as the "mother of all monster shale wells."

White South, operated by Chesapeake Energy, coasted in at an initial production rate of 17,800 Mcf/d of gas in September -- very good volumes in a field where wells have typically come in at maybe 2,000 Mcf/d, 3000 Mcf/d or even 5,000 Mcf/d of output.

But there are bigger monsters -- much bigger ones -- lurking nearby.

Gas shales and other unconventional gas plays, such as the Bossier and Carthage fields in East Texas, have yielded IP rates that out-monster White South. In these fields, wells that debuted at 20,000 Mcf/d, 30,000 Mcf/d and even 50,000 Mcf/d have not been unknown. For example, a Devon Energy well last year with the unlikely name of Kardell Gas Unit 1H at the Carthage field yielded an IP of 30,700 Mcf/d, and a few years back EnCana even saw one well named Laxson gush an incredible 65,000 Mcf/d for awhile.

Even in the second quarter, Chesapeake reported three DeSoto Parish, Louisiana wells -- Sloan H-1, Brasch Family H-1 and Wren H-1 -- which each averaged about 22,000 Mcf/d peak rates over 24 hours.

According to the Star-Telegram, White South has topped the one-month production rates of all other 14,000 producing wells in the Barnett, which is now found under 20 counties in North Texas. The well likely will recover gas from beneath roughly 500 properties, delivering a financial boon to those landowners.

In fact, 17,800 Mcf/d is no slouch earnings-wise, either: at current gas prices of just over $4/Mcf, that output level rakes in nearly $75,000 -- not bad for a day's work. Of course, out of that sum salaries, royalties, drilling costs and well maintenance must be paid. And with decline rates of 30-40-50% in the first year, the output level drops steeply over time. But multiply that bonanza by dozens or even hundreds of wells in a field owned by any given operator, and it's still a hefty hunk of change while it lasts.

The reason energy companies are able to extract monster gas levels from a single well is technology. Horizontal drilling, longer laterals (extending the horizontal leg of a well by thousands of feet to access more gas) and multi-stage fracturing have vastly upped the volumes yielded by an individual well. And in the last decade -- and especially the last several years -- operators have been recovering more and more gas, and also oil, from their wells.

Even when gas prices sank below the $4/Mcf threshold, these wells still were economic. That is why producers have flocked to shale and unconventional plays and continue to drill away despite relatively low gas prices. So if you ever wondered why the US has a gas surplus that keeps the price tamped down and is projected to remain that way for the next year or so, now you know why. Blame the monsters.

http://www.platts.com/weblog/oilblog/2010/11/09/in_the_unconven.html