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Thursday, August 4, 2011

Devon Energy pioneers shale drilling and production

US independent Devon Energy Corp. (NYSE:DVN) has earned the distinction as the first company to combine horizontal drilling and hydraulic fracturing to produce hydrocarbons trapped in shale plays.

Prior to the 2001, this had never been done, and oil and gas in shale rock was considered uneconomic.
Announced in 2001 and completed in 2002, Devon bought junior oil and gas company Mitchell Energy. Mitchell held acreage in the Barnett Shale, and had been drilling vertical wells and hydraulically fracturing them to produce natural gas from the formation.

The Barnett Shale is located just above the Ellenberger aquifer, which if penetrated will ruin the well. In the Central Texas counties of Denton, Wise and Tarrant, the Barnett Shale is insulated from the aquifer by the Viola limestone.

After several unsuccessful tries in areas not protected by the limestone, Mitchell was drilling wells in the areas that posed no threat of water infiltrating the shale because of the Viola; but Devon had much more acreage -- about 300,000 acres beyond the limestone. That meant that the majority of Devon's acreage could not be produced with vertical wells.

"We realized that if we could drill horizontally across the non-core area of the Barnett, than we could use the bottom half of the formation as the barrier, protecting us from the Ellenberger aquifer," revealed Devon spokesperson Chip Minty.

That realization is what drove Devon to experiment with the combination of horizontal drilling and hydraulic fracturing in shale plays. While both practices were well-established technologies, no companies had ever used them together in shale.

While the first two wells drilling and completed this way were disappointing, the third was encouraging.

"What we found was these horizontal wells would produce three times more gas as a vertical one, and they only cost twice as much," Minty said.

What Devon started tinkering with in 2002 has become an industry-wide practice for developing shale, unconventional and tight gas formations in North America. Now many companies are starting to use horizontal drilling and hydraulic fracturing in other parts of the world, including China, Poland and Argentina.

"This company has a history of innovation and perseverance," Minty continued. "Devon pioneered production of natural gas from deep coal seams in northwestern New Mexico in the late 1980s and early '90s."

At its operations in the Fruitland coal formation in the San Juan Basin of New Mexico, Devon was one of the first companies in the US to economically produce natural gas from coal.

Applying its expertise to various shale plays across North America, Devon currently employs 72 rigs in North America. Devon is active in the Barnett Shale of Central Texas, Cana Woodford Shale in Western Oklahoma, Arkoma Woodford Shale in Southeastern Oklahoma, Haynesville Shale in East Texas, the Permian Basin in West Texas and Southeast New Mexico, Horn River Shale in British Columbia Canada, Utica Shale in Ohio and Michigan, and Tuscaloosa Shale in Louisiana. The company is also pursuing exploration and production drilling in oil sands and unconventional plays in Alberta.


Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

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