Perhaps you think of this as benign. "Big flippin' doo-doo," you say, "why's this so important?"
Because the yanks are innovators of shale gas extraction: others in the West are looking to us for help. Europe is in study mode to gauge its shale gas potential; Canada, too. As I mentioned before, shale gas is expected to meet half of N. America's natural gas needs by 2020. Big things are expected from this, and developed nations want our know-how.
Canada's largest independent natural gas producer, which released strong first quarter results Wednesday, said this year it will redirect $290 million US from other areas toward its promising Haynesville leases on the Texas- Louisiana border.
The addition will bring EnCana's investment in the play up to $580 million, about 13 per cent of the company's $4.6-billion capital budget dedicated to oil and gas programs in Canada and the United States.
Technology broke open opportunities to produce shale gas, once notorious for being a difficult resources to make economical, EnCana president Randy Eresman said.
Tough times, but EnCana is well braced...
Calgary-based EnCana holds about 435,000 net acres in the Haynesville shale play, as well as one of the largest land positions in northeastern British Columbia's Horn River play - about 260,000 net acres.
The company has committed to reducing costs across the board by 10 per cent this year, and part of the savings will be reallocated to programs like the Louisiana resource, where labour and service costs are cheaper and the infrastructure to carry the fuel to market is extensive, he said.
The company reported earnings of $962 million US, up from $93 million a year prior.
Eresman warned EnCana could cut its $6.1-billion capital budget later this
year if natural gas prices remain in a trough.
If demand doesn't drain current high storage inventories, or there are no supply disruptions from hurricanes, natural gas prices could drop below $3.50, forcing more wells to be shut in, analysts say.