the utica-an emerging canadian shale gas play

Here's part of a 5 page report just out on the Utica. Very interesting!

The Utica An Emerging Canadian Shale Gas Play
By Richard (Rick) Mills

Recent developments in both horizontal drilling techniques and the multi-stage hydraulic fracturing of horizontal wells have turned shale plays from being marginal or un-economic to being the darling of the industry and the future of gas development in North America.

Rex Tillerson, Exxon's chief executive officer said, Natural gas is expected to be the fastest growing of the major energy sources; it's going to grow at a substantially faster rate than oil or coal." Exxon Mobil Corp is buying XTO Energy Inc for $30 billion in stock to get its shale gas assets in the US.

French oil company Total SA announced on January 3, 2010 that they will pay $800-million in cash for a 25% stake in Chesapeake's Barnett Shale assets. The French company will also pay an additional $1.45 billion to help fund 60% of Chesapeake's share of drilling and completion expenses.

In a recent Bloomberg article regarding the Total SA / Chesapeake Energy Corp. deal Chesapeake stated We have agreed to discuss with Total an Eagle Ford joint venture as well as joint ventures covering several Canadian natural gas shale plays in which Total has shown interest.

The Utica

The Utica Shale gas play has the potential to develop into something very special. The best leverage for investors could lie with those junior oil and gas companies who have amassed large exploration permits in the St Lawrence Lowlands right in the heart of the Utica fairway.

Major players like Forest Oil Corporation and Talisman Energy Inc. are now committing large amounts of money to find out if it is. Market confidence - in regards to the commercial viability of this play - could increase dramatically in the coming months. This author believes the work commitment by the major players in the area warrants investors paying closer attention to this still young, early days gas play - the prize at stake in Quebecs St. Lawrence Lowlands is enormous - if Utica shale gas is proven commercially viable then the Utica has the potential to be one of the largest resource plays in Canada.

The Utica shale gas play has a lot going for it:
- Shallow depth of the shale
- Proven fracturability
- High production rates in vertical tests
- Rock properties are comparable to other more established shale plays
- High-quality natural gas with minimal impurities
- Infrastructure in place with nearby access to major pipelines
- Premium natural gas pricing to NYMEX helps make the economics compelling
- Low initial acreage costs with low carrying costs
-Quebec Canada is one of the best areas in the world to explore and develop

Conclusion

There is a lot of work being done today, in the Utica, to answer the question - are the all-in costs of drilling, completing and fracing horizontal wells going to be economic/will the upcoming results support further development of this play? If upcoming results indicate robust economics then ladies and gentlemen we just might have one of the largest resource plays in Canada happening in the most perfectly situated place for one to happen.

Quebecs Utica shale gas play should be on investors radar screens for all the right reasons, is it on yours?