Horn River Basin Shale - Horn River Shale Map - British Columbia, Canada Natural Gas Field

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Horn River Basin Shale Play - Horn River Shale Oil & Natural Gas Field Information

Horn River Shale Basin Location:  Northeast British Columbia, Canada - South Northwest Territories - East of Liard river - Muncho Lake - Fireside - Summit Lake - City of Ware - Toad River - Muncho Lake Provincial Park

Horn River Shale Drilling Area:  The major drilling area at Horn River Shale Formation is just northwest of Kotcho Lake and Southeast of Maxhamish Lake B.C Canada.  Major cities in the region are: Nelson Forks, Snake River, Fort Nelson, Muskwa.

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What is the Horn River Shale Formation?

The Horn River Shale Formation ( British Columbia, Canada  Shale ) is a natural gas shale field located deep below the earth's surface.  Located mainly in British Columbia B.C, Canada, the Horn River Basin shale play is the largest shale gas field in Canada according to B.C. Energy Minister Richard Neufeld.  In 2007, companies spent a total of 240 million in new leases for the Horn River Basin Rock Deposit Area but due to the recession, that number has declined years after.   Another emerging shale play in British Columbia just south of the Horn River formation is the Montney Shale.  In late 2010, the Horn River Shale drilling tests indicated some oil potential in the Exshaw Shale Formation as well as the Cardium Shale Formation.  While it is very early, big time companies such as Devon Energy & Murphy Oil are talking highly on the oil potential here.  The fact that there is a high potential to strike oil, the Horn River Shale is heating up again.

Horn River Basin Shale Map - Drilling
Horn River Shale Map

Though this field has been around for a long time, the Horn River Shale really started heating up back in 2007-2008 due to the rise in the price of natural gas.  The Shale boom that went on in the United States and Canada was mainly due to the spike in natural gas prices as well as new drilling technologies called Horizontal Drilling and Hydraulic Fracturing.  In short, after a well is drilled vertically, it is then drilled horizontally.  These companies use millions of gallons of water and sand at a high pressure to fracture the shale which then releases the gas.  The natural gas is transferred to various pipelines that run throughout Canada.

Some experts say that if you would have mentioned extracting natural gas from shale 10 years ago, you would have been laughed at!  But now, given the recent boom in shale exploration and new technology, this laughing has turned into serious business for many large companies.  If the recent tests are true about the oil potential, the Horn River Shale Basin could turn into a large oil field.

Experts estimate that there is about 250 trillion cubic feet of Natural Gas in northeast B.C in which 10-20%  would be recoverable.  The Horn River Shale is fairly new on the oil front.  There have been several test wells drilled by a few companies.  While remaining somewhat quiet about their operation in the Horn River Shale,  many companies are putting up large amounts of money for land leases.  It doesn't take a brain surgeon to figure out that this Shale Play will produce a huge supply of Natural Gas and hopefully oil in the coming years.  Check out other Oil & Natural Gas fields just like the Horn River ShaleHaynesville Shale -  Marcellus Shale - Bakken Oil Shale - Fayetteville Shale - Brazil Oil Field - Woodford ShaleBarnett Shale - Chattanooga Shale - Utica Shale - Eagle Ford Shale - Niobrara Shale

ExxonMobile ( XOM ) and Imperial Oil ( IMO ) have reportedly beefed up their stake in the Horn River Shale by winning the bid on 8 new blocks of land in a British Columbia land sale.  Exxon now ranks with the big boys by owning around 250,000 acres.

February 26, 2009 - TransCanada ( TRP ) secures shipper commitments for Horn River Pipeline project.  TransCanada Corporation (TSX, NYSE: TRP) (TransCanada) today announced the successful completion of a binding open season, securing support for firm transportation contracts of 378 million cubic feet per day to connect new shale gas supply in the Horn River basin north of Fort Nelson B.C. to the Alberta System.

The Horn River pipeline project is approximately 155 kilometres (km) and is expected to use new pipelines up to 36-inch diameter and an existing pipeline in the area to transport sweet natural gas from the Horn River area to a tie in point on TransCanada’s existing Alberta System.  The pipeline is expected to be operational early in the second quarter of 2011, subject to regulatory approvals.  The proposed project is expected to cost approximately $340 million.

April 21, 2010 - Encana ( ECA ) Entered into farm-out agreement with Kogas Canada Ltd. (KOGAS), which will invest up to C$565 million over three years towards earning a 50 percent interest in about 154,000 acres of land in the Horn River shale play and Montney formation in the Greater Sierra and Cutbank Ridge key resource plays

Companies Involved in Drilling the Horn River Shale - Horn River Shale Stocks

- Encana ECA - Encana (ECA) provides Horn River Shale Update - At our Greater Sierra key resource play, production was up 16% over the third quarter of last year, led by increased production from the Horn River where production more than tripled from the same period last year. We completed stimulation operations on the north half of the d-1-D pad. By the end of the quarter, 3 of the 7 wells had flowed at test rates within our expectations or about 15 million cubic feet equivalent per day per well. The remaining 4 wells have been undergoing cleanup and are flowing through test equipment. Work is currently progressing to have the first set of wells through permanent facilities by late October and the second set of wells to follow approximately 10 days later. In July, as part of our plans to attract third-party capital investment in our undeveloped assets, we expanded our Horn River farm-out agreement with KOGAS, which will see them invest an additional CAD $185 million in approximately 20,000 additional acres in the Kiwigana area. We are very pleased with the expansion of our original CAD $565 million farm-out agreement with KOGAS, which has allowed us to accelerate our drilling program both at Kiwigana and in the West Cutbank area.

- Apache APA - Apache and Encana take lead in the new and hottest shale play ( Horn River Basin Shale ) so far this year.  APA has 425,000 acres of leasehold.  In the Horn River, the quality of the rock and the development efficiencies certainly differentiates it. We can achieve those through large drilling pads on continuous ground acreage. In addition, as we progress our Kitimat LNG project, our goal is to give Horn River access to international LNG markets. Our Horn River activity continues to dominate Canadian operations with horizontal wells were drilled in the two island of late developed area during the quarter with four of the Apache operated 52 pan and three on enhanced and can operated 63 tape. In addition come Apache drilled through horizontal Wells in our ability area to hold expiring acreage. Drilling efficiencies that result in cost performance continued to improve with average drill times now at 19 days from the spud rig release and average drill cost at $3.7 million per well for about 7,200-foot of horizontal section
2011 Update - Third quarter Horn River production increased by 18%, as compared to the second quarter that averaged 98 million cubic feet of gas per day net to Apache's working interest, with peak leaping into production approximately 122 million cubic feet of gas per day. Third quarter production levels don't reflect the benefit of our activity in liquid-driven plays yet. And a significant volume of the wells we have drilled that are put in Canada year-to-date are still low on production.

- Exxon Mobile XOM - In Canada, the Horn River Basin is a world-class Devonian shale gas resource that is currently in the evaluation stage. We hold over 300,000 net acres and are one of the largest net acreage holders in the basin.  2011 Update - In Canada, we added approximately 18,000 net acres adjacent to our core area at Horn River.   As you know, Horn River is a key focus area in our global unconventional portfolio, in particular in North America. We do have continued active drilling underway in our wells. We're testing those, both our wells as well as wells we have in a joint venture. I'll tell you those wells are performing well and they successfully verified the presence of multiple productive reservoir areas on our lease holds. Without giving totals, we're seeing average test rates of anywhere from a 0.5 to 1.5 million cubic feet a day from a single frak, so we're happy with that. In terms of your question on CO2 and H2S, I'll tell you while we're continuing our evaluation on that, I really don't have any information and couldn't comment on that specific question.

- Quicksilver Resources KWK - Quicksilver KWK has a nice acreage position in the Horn River Basin Shale -  Canada - Horn River Basin - 2012

Quicksilver drilled four Horn River wells in the first quarter to complete its 2011/2012 winter drilling program. All of Quicksilver's exploratory licenses have now been converted into 10-year leases.

Average daily production in the first quarter 2012 was 11.3 MMcfd. The company expects to bring as many as eight wells online in June, and drill up to another eight by the end of 2012.

During the first quarter, the company retained an investment bank to help evaluate the opportunities for a joint venture partner to help exploit the Horn River acreage.

- Devon Energy  DVN -  Devon DVN has taken a nice drilling stake in the Horn River Shale Natural Gas Field -  Also in Canada in the second quarter, Devon increased its lease position in the Horn River Shale play in British Columbia to more than 100,000 net acres. The company is now planning its upcoming winter drilling program for the Horn River area.

- EOG Resources EOG - ( From Seeking Alpha ) In the British Columbia Horn River Basin, we intend to continue a steady program and drill seven horizontal wells compared to six last year. We now have six months of sustained production from several of our wells and are encouraged that this program will likely be competitive with other North American shale plays.

We're also encouraged that the BC government is considering royalty incentives to help offset the challenge of the remote location and associated costs and make the play more competitive with other North American gas plays. We have 157,500 net acres in the play and it's worthwhile noting that EOG's current activity is on the west side of the play there is access to a separate gas pipeline infrastructure with current adequate capacity for a near-term forecasted volume growth. The pipeline will be expanded in the future to meet increases in drilling activity.

We currently believe that takeaway infrastructure for the overall field won't happen until early 2012. But given our current access to takeaway capacity we expect to be able to slowly ramp up production each year so our Horn River production growth profile will be steady year-by-year rather than a hockey stick slope.  2010 Update:  In the Horn River Basin, EOG will operate an active drilling program in the first half of the year, with the goal of completing and turning wells to sales during the second half of 2010.

- Nexen NXY - Nexen NXY is very active in the Horn River Shale Basin Play. Northeast British Columbia - Our previously announced joint venture agreement with INPEX and JGC is expected to close in the second quarter.

We continue to progress our 18-well pad in the Horn River toward first production in Q4 2012. We recently completed the drilling of the wells and the cost came in under budget; completions activity is scheduled for the next several months.

Imperial Oil  IMO - Imperial is planning to drill a horizontal multi-well pad pilot development to evaluate longer-term well productivity this winter season. The company also added an additional 11,000 acres, bringing its joint venture holdings to 321,000 net acres – one of industry’s largest acreage positions in the area..

Park Place Energy PRPL - Park Place is looking to get into the Horn River Basin Play - Park Place is also actively seeking to acquire a blue-sky opportunity and has focused on shale gas properties in the Horn River Basin and area, which is within the Company's defined core area for development in North East British Columbia. The Horn River Basin has been described as significantly larger than the Barnett shale area in Texas which was first drilled in 1981 and currently produces 3 billion cubic feet per day. Wood Mackenzie stated in a recent report that they predict the Horn River Basin area could hold 50 trillion cubic feet of natural gas making it the hottest resource play in North America.

Nabors Industries NBR - Nabors NBR builds and supplies drilling rigs to companies in the Horn River Shale.  We have several rigs committed to these areas, including a heli-portable rig that's going to go in the Horn River and the big advantage of that is number one, it's our acreage so we can show how we can drill but also, it's going to be on a pad.

Quiksilver Resources KWK - Horn River Basin - In the Horn River Basin of northeast British Columbia, Quicksilver's C-29-D well produced at initial rates of approximately 14.4 MMcf per day of natural gas through a 50/64-inch choke and has averaged more than 12 MMcf per day during the first 22 days of production. The well tested a 4,600-foot lateral section of the Muskwa formation and included 14 stages of fracture stimulation. This is the company's third completion in the basin and the most productive to date. The company's three producible wells in the Horn River are currently capable of producing more than 15 MMcf per day. The company sells this production through a permanent sales line that connects to the Spectra pipeline to Fort Nelson. The company expects to begin completion activities on a fourth well in the basin by year end. The company has also recently spudded a horizontal well to test the Exshaw formation, encountered at a vertical depth of approximately 4,350 feet, for commercial oil.

Quicksilver holds 100% working interests in 20 exploratory licenses covering a total of approximately 130,000 gross contiguous acres in the Horn River Basin. Drilling activities to date have already validated eight licenses totaling nearly 50,000 acres. The company expects to validate the remaining exploratory licenses during the next two winter drilling seasons.

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