The Mid-Bossier Shale: the Haynesville Twin?

It turns out the Haynesville Shale may have a long, lost brother. Meet the Mid-Bossier Shale: a big, bloated fat boy of possibly equal flatulence as its more esteemed sibling. And you won't believe how close it's been hanging near the Haynesville boy this whole time!

EnCana Corp. says early drilling results indicate it is sitting on a potentially massive natural gas resource in the southern United States – one that's stacked on top of the already lucrative Haynesville shale of east Texas and western Louisiana.

EnCana said Wednesday it believes the so-called mid-Bossier shale could rival the size of the Haynesville reserve, which the U.S. Department of Energy has estimated contains 251 trillion cubic feet of recoverable natural gas. That's enough to supply the entire continent for 10 years, although only a fraction of technically recoverable gas is usually profitable to produce.

The bonus for EnCana is that the mid-Bossier and the Haynesville are what the industry calls a “stacked play.” Depending on location, the Haynesville shale lies between 3,200 and 4,100 metres below the surface. The mid-Bossier is 150 metres above it. Many wells drilled to obtain access to the Haynesville pass through the mid-Bossier.

Because the mid-Bossier did not initially show as much as promise as the Haynesville, and because of Louisiana land-retention regulations, companies have
rushed to drill the deeper Haynesville first. As a result, the mid-Bossier itself has been largely ignored until now.

EnCana, however, has drilled several vertical wells and, in the past few months, a single horizontal well to test the mid-Bossier. It found gas that mirrored the quality and quantity of the Haynesville.

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Houston-based Petrohawk Energy Corp., which has 300,000 net acres in the Haynesville, said the mid-Bossier does not appear to be as large as the Haynesville. “It's not present where we do most of our drilling,” said Petrohawk vice-president of investor relations Joan Dunlap. The company is drilling its first mid-Bossier well and does not yet have results it can release.

EnCana owns 433,000 net acres in the Haynesville, which has shown enough promise that the company doubled its budget for the area to $580-million this year to do the work required to keep its land position.

Some analysts have estimated that Haynesville gas can be produced for $3.50 (U.S.) per 1,000 cubic feet, or slightly above the current trading range. The large, cheap supply has raised fears of a natural gas oversupply that could keep prices low for years to come.

- Brewskie