Is the Wolfberry the next Eagle Ford?

Shale is hot. People are interested; production and drilling are up. I attended the Unconventional Gas show in Fort Worth a couple of weeks ago, and people are certainly interested -- in US shale, as well as shale potential in Europe and China and beyond.

The first to really take off were Haynesville and Marcellus. Then more dry-gas shales came on the scene. Now, liquids-rich or oil-laden formations, such as Eagle Ford and Bakken, are garnering all the attention of both investors and producers. 

Billions of dollars have been spent on acquiring acreage and interest, as well as forming JVs. The number of land rigs has picked up across the nation, spurred by -- you guessed it -- shale exploration and developments. Additionally, pipeline, refinery and gas processing facility construction is on the rise.

Not just oil and natural gas are flowing, money is too.

Enter the Wolfberry and Wolfcamp plays.

Now, as an oil and gas writer, my ears perk when any shale or unconventional play is mentioned. In addition, this particular play is located in my father's home county -- I can't help but notice that.

I first read about it when El Paso Corp. revealed in late September that it was adding more than 120,000 acres in West Texas to its leasehold. I know Crockett County, and it is natural gas country, but this release stated that it was in the emerging Wolfcamp oil shale play.

What? How had I never heard about this? I did a little back-digging on the PennEnergy site, and lo and behold: there have been a couple of smaller stories about the Wolfcamp -- and it's supposed to be liquids- and/or oil-rich.

Then, I noticed a couple more stories about the Wolfberry trend. LINN Energy spent $352.2 million acquiring natural gas acreage in the Wolfberry trend, with notes of oil.

My curiosity is piqued, and I've been asking everyone who will listen in the oil patch whether or not they know anything about it. What's the word?

Enter a very nice oil patch pal I fortuitously sat next to on the plane from Tulsa to Houston. He was investigating the Wolfberry, as well. Imagine that! He had a meeting the next week with someone in West Texas, and he'd share his insight.

Here it is:

Presently, there are about 260 rigs working the Wolfberry formation in West Texas. Not quite shale, Wolfberry is a tight formation that's being drilled vertically. "The same fracturing techniques apply; therefore this formation previously unproductive to drill becomes viable, considering each well produces 200 - 800 BPD Oil and 0.2 to 1.0 MMSCFD rich natural gas, making it very attractive."

Is the Wolfberry the next Eagle Ford? What's the difference between the Wolfberry and the Wolfcamp? I'm searching, asking, begging. Do you know? Please share.

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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.

Confidence Vote: Chevron sanctions ultra-deepwater Jack-St. Malo development in the US GOM

Despite the drilling moratorium, despite the permitting delays, despite all the problems that we're experiencing in getting our offshore oil and gas professionals back to work -- Chevron delivered a major vote of confidence for offshore oil and gas in the US Gulf of Mexico.

Today, US super-major Chevron (NYSE:CVX) sanctioned the $7.5 billion development of its Jack-St. Malo ultra-deepwater fields in the Lower Tertiary. A major project moving forward for the US GOM, the integrated development will include three subsea centers tied to a massive semisubmersible production hub with the capacity to production 170,000 barrels of oil and 42.5 million cubic feet of natural gas a day.

Already, Mustang has been contracted to provide FEED and then detailed design of the topsides for the development. Also, Cameron won a $230 million contract to provide subsea equipment for the development.

There are billions of dollars of contracts yet to be awarded.

The oil and gas community is confident that it can move forward with deepwater offshore operations safely. Thank you, Chevron -- and partners. Thank you for believing in the US Gulf of Mexico, and thank you for bringing sorely needed jobs back to the Gulf Coast.

Hopefully, this development will help to encourage others to commit to the US GOM and move forward with more drilling, developments and contracts.

International players grab more shale acreage, as US fails to see its natural gas potential

The race is on. The first shale formations to really take off were the Marcellus and Haynesville, as well as the Fayetteville and Barnett. Now, liquids-rich shale and unconventional reservoirs are all the rage, with billions going to joint ventures, acreage acquisitions and drill carries in the Eagle Ford and Bakken. Niobrara is also popular, and others are gaining steam.

Just this week, Chinese major CNOOC agreed to pay US producer Chesapeake $1.1 billion to gain interest in its Eagle Ford shale acreage in South Texas, as well as an additional $1.1 billion in a drilling carry. Additionally, Norwegian company Statoil and Canadian major Talisman joined forces in another billion-dollar Eagle Ford shale acquisition.

All the while, T. Boone Pickens and others like the American Gas Association are pushing for a shift to using the cleaner-burning fuel for everything from power generation to natural gas-fueled truck fleets.

According to a report from Pickens, the US imported 60 percent of its oil, or 346 million barrels, in September 2010, spending some $26 billion on the crude imports.

Switching from foreign oil to other energy sources isn't as easy as fueling our cars with something other than gasoline. Our dependence on foreign oil largely is built on our dependence on refined products and petrochemicals, but we can start to make a shift -- to at least using domestic crude and that from our friendly neighbor Canada, which is swimming in oil sands.

While wind and solar and geothermal energy sources continue to grow, unconventional natural gas and shale is abundant in the US -- and the opportunities for change and energy independence are right in front of us.

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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.

Integrated Energy: Retail electricity provider Direct Energy buys Canadian natural gas field

As the editor of PennEnergy, a complete energy news, information, jobs and research portal, it's always nice to see a story that spans the petroleum/power industries, and this is a great example of an energy company integrating operations to save on costs.

Earlier this month, retail electricity provider Direct Energy closed a $367.5 million purchase of a producing natural gas field in Canada. Previously owned and operated by Suncor, the Wildcat Hills natural gas field consists of 97 producing wells, as well as 42,000 acres of undeveloped land.

With current production at 80 MMcf/d and reserves estimated at 241 Bcf of gas equivalent, the Wildcat Hills field along with earlier upstream assets will supply 35 percent of Direct Energy's load required by its North American retail natural gas customers.

Rather than pay another company, Direct Energy is going to produce, process and transport its own natural gas to supply to its customers.

Additionally, the company is on the search for more natural gas fields to acquire.

"Direct Energy intends to continue investigating opportunities for upstream investments in natural gas, including shale, and power generation assets in North America," said Badar Kan, president of Direct Energy Upstream & Trading. "In today's low natural gas price environment, well-capitalized companies, like ours, are in a strong position to acquire value-producing assets which is consistent with our strategy for greater integration and growth."

 Direct Energy Upstream & Trading oversees natural gas production, power generation, wind power purchase agreements, midstream gas storage and transportation, commodity procurement and proprietary trading. The company currently owns and operate 4,550 natural gas wells in Alberta and three gas-fired power plants.

A subsidiary of Centrica, Direct Energy (LON:CNA) provides energy to more than 6 million customers.

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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.

US shale may save us all

US shale resources are exciting. My friends and colleagues can attest, I get overly excited about the potential of US shale.

Marcellus, Haynesville, Barnett, Fayetteville, Woodford, Utica, Eagle Ford, Bakken -- they are on the tip of my tongue and the forefront of my mind (and those of investors).

US shale gas resources are huge! Trillions and trillions of cubic feet of natural gas -- right under our feet. That means energy independence. That means jobs right here in the US, lots and lots of jobs related to drilling, producing, transporting, processing and exporting domestic natural gas. That means billions of dollars to help our economy and bolster local, state and federal government. That mean gas-generated power plants galore.

While prices for natural gas aren't the best on the Henry Hub today, companies are still investing in US shale and in natural gas in general. (Think of the billions of dollars being invested in Western Australia's massive LNG projects, like Gorgon, Wheatstone, Bonaparte, Ichthys and Gladstone.) To me, that says, they know something laymen don't. (After all, they've got analysts and economists and mathematicians and industry experts ... who study these things for a living.)

In fact, Wood Mackenzie just reported that in the first half of 2010 alone US shale gas M&A expenditures reached $21 billion. That's a lot of money to change hands, and they predict that the mergers and acquisitions market will continue its hot streak.

Translation: Natural gas is going to pay off, and prices are going to climb.

Ol' T. Boone Pickens is on to something, and natural gas-fueled cars may be just around the corner if he has anything to do with it.

In fact the US may very well become the largest exporter of clean energy because of our natural gas resources. Three LNG import terminals have started the ball rolling on switching to being export terminals, and pipelines have begun the process of both building and becoming bi-directional.

Natural gas is clean-burning. It's domestic, and it's plentiful. Jump on the natural gas/shale bandwagon with me. It's taking off around the corner!

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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.

Is it brainwashing or ignorance? Activists gain glory, but miss the point

Really? Greenpeace has stopped offshore drilling again. This time, two activists have climbed the anchor chain of the Stena Carron drillship, which was bound to drill for Chevron offshore the Shetland Islands.

The environmentalist group claims that they are protesting, asking North Sea governments to stop deepwater drilling, spewing fear propaganda to scare the public into thinking that the BP disaster in the Gulf of Mexico could happen anywhere.

First off: The BP disaster is just that -- a disaster. No one meant for the well well blow-out, 11 people to lose their lives, the rig to sink or the well to spill oil and gas into the waters of the Gulf of Mexico. It was an accident, and companies and regulatory agencies across the globe are trying to learn from the events surrounding the Macondo well and enact change and safety measures to ensure it doesn't happen again.


While the activists may be acting with good intentions, their actions are pretty misguided. To think that the world can stop its reliance on petroleum products today is very simple-minded.

In fact, the photo of the two activists "training" for the action shows the likely numerous petroleum products required to safely achieve their mission, including an inflatable sea vessel, plastic safety helmets and various nylon ropes.

One of the activists said, "Instead of drilling for the last drops in places like this, the oil companies should be developing the clean energy technologies we need to fight climate change and reduce our dependence on oil."

The oil and gas industry is doing just that. Oil and gas companies are at the forefront of investments into green energy; they are aware of peak oil and not only ensuring energy for the future, but I'm sure ensuring a future for their companies.

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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.

Scare tactics and misinformation

Death and destruction -- and fear -- sells. It sells magazines and movies and news.

Because of this, our news sources have become sensationalistic. I catch news trailers that are downright scary. "Is poison lurking in your fridge? Tune in tonight."

Yikes! What if I eat it before the 10 p.m. news program starts?

The same thing has happened with media coverage of our petroleum industry. Scare tactics make for devoted listeners/watchers/readers -- but really, are we posting the news or misinforming (and scaring) our public?

Take yesterday's accident offshore Louisiana. I got word in the morning that an oil rig had exploded, ala Deepwater Horizon; and my heart sank.

No! Please don't say it's true -- I thought of our already embattled offshore industry, laid off because of the moratorium, still mourning the losses of the Deepwater Horizon crew. I thought of the book-throwing environmentalists who use fear and misinformation to enact change. I thought of the drilling moratorium, the Rally for Jobs campaign by the API, the Save US Jobs campaign by the AEA, the National Taxpayers Union's campaign to support domestic energy companies.

I can't tell a lie -- I also thought about my job as a petroleum writer.

Initial media reports coming out of the major sources were scary, really very frightening.

When I got wind of the story, there was no official report, so I dug a little, just as a good journalist should. I called multiple offices in the US Coast Guard until I found the right one. I asked my source there what was going on.

Thinking back, he never said "rig." He called the facility the "Vermillion 380," which I automatically connected as a block, not a rig. I asked him about it, but he wasn't sure. (Mind you, this was VERY early on...)

Right off, I knew the initial reports were wrong, and I posted what I knew about the accident, facility and company.

I called Mariner. I called the BOEM. I checked websites and waited for more information. I updated my site when I found out more.

I breathed a sigh of relief when I learned that all offshore personnel were rescued and safe. I breathed another sigh of relief when I learned that there was no oil leaking into the Gulf.

I hoped that our media would quickly change it's tune -- stop connecting the Vermillion 380 accident with the Deepwater Horizon accident. Stop scaring our public into believing that offshore drilling is unsafe.

Yes, everyone wants to know that our waters are safe, but misinforming the public to win more readers or viewers is just wrong.

Even last night, when I watched the news about the Mariner accident, journalists continued to call the production platform a rig ... which is the word used to describe a drilling rig. "Rig" is not used in the industry to denote production facilities, and production facilities, for the most part, do not drill (although some do house drilling equipment or they may host a drilling rig via cantilever).

This morning, I was saddened by a statement released by the United Steelworkers supporting the fed's moratorium on drilling, connecting the Vermillion 380 production platform accident to a need to increase safety in offshore drilling.

Now, should our industry always strive to increase safety, protect the environment and strengthen ethics? Yes. HSES is such an important part of our industry, and it should and will remain so.

And I agree, our authorities really should make sure that our practices are safe. But are they doing that, or are they saving face? What's taking so long, and why have only four drilling permits been issued in the last four months (even in shallow waters)?

While images of a smoking production platform keeps people on the channel, what the media is not doing is informing its audience about the amount of petroleum the US consumes, how much we import, where we import it from, and what we'll have to do to support our society in the future -- and how much that will cost -- should oil and natural gas exploration and production in the Gulf of Mexico get shut down.

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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.