January 2010 AAPG EXPLORERHello all Gastem shareholders:
This excerpt was taken from the January 2010 AAPG EXPLORER. The entire article is 5 pages with great information about the shale play in Quebec. The entire article is called Shale Play Extends to Canada. The author is Susan R. Eaton, EXPLORER Correspondent. As mentioned above, this is only an excerpt.
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During the past two years, Forest Oil has announced Utica production rates, employing slick water fracs in both vertical and short-reach, prototype horizontals, of up to 1mmcf/day. Last year Forest Oil employed four-stage fracs in its short-reach horizontals, but reported difficulties in cleaning up the wells and recovering the frac fluids. Through a farm-in with Junex Inc., an organically grown junior, Forest Oil plans to drill a vertical pilot hole during the winter of 2010, followed by the drilling and completion of a horizontal wellbore.
"From a scratch position in 2006, we are now at a stage where the concept has been proven, and we are moving to the pilot stage," said Raymond Savoie, president and chief executive officer of Gastem Inc., a Quebec-based junior. "So far so good; the Utica is shaping up to be a major shale play in North America."
The game plan, Savoie said, is to establish repeatability in drilling and completion techniques and, ultimately, to prove the play's commerciality.
With an exposure to 486, 000 gross acres in Quebec's Utica and Lorraine Shale Gas Fairway, Gastem is moving forward with pilot projects in 2010 in various partnerships, including one with Talisman.
Gastem is the first organically grown Quebec company to export its Utica Shale expertise to nearby New York state, where it has more than 35, 000 gross acres under lease in the Utica and Marcellus Gas Shale plays. In October, Gastem drilled and cased its first Utica well, Ross #1, to 4,950 feet.
"We've done a lot to compare the shales in Quebec and New York in terms of the anatomy of a shale," said AAPG member Geraint Lloyd, Gastem's vice president of exploration.
"The Barnet has been the golden shale play that everyone uses as a standard," Lloyd said. "The Utica is actually closer to a marl than to a shale."
Lloyd's used many key metrics - drilling depth, thickness, clay content, TOC, pressure gradient, IGIP and gas price (US) - to compare the Utica, favorably to the Barnett.
According to Lloyd, Gastem has conducted numerous petrophysical evaluations to establish "whether or not we can break the rock." Because the Barnett contains a higher percentage of silica, it fracs easier than the more calcareous Utica.
In 2008, Canbriam Energy, a Calgary-based company created to chase resource plays in North America, secured 173,000 acres in the Utica Fairway, through farm-in deals with Gastem, Petrolympic Ltd. and Ressources & Energie Squatex. Canbriam also is actively drilling the unconventional Montney play in northeastern British Columbia.
"The Utica is a true shale basin, similar - yet mineralogically distinct - to those in the United States, including the Barnett and Marcellus," explained John Nieto, Canbriam's vice president of exploration.
Canbriam Energy's team is integrating log, core and seismic data, developing its propriety geological and petrophysical models for the Utica Shale. Canbriam has designed both core analysis and wireline logging programs to optimize completion methods.
Leveraging upon its success in horizontal drilling and multi-stage completions in the Montney, a hybrid shale that's siliciclastic in nature, Canbriam is transferring this expertise to the Utica.
According to Nieto, a petrophysicist and AAPG member, Canbriam is still a relative newcomer to the play.
"There's big potential in Quebec, and if you can get in during the early stages of exploration, the rewards can be higher," Nieto said. "Obviously, the early birds take greater risks."
Canbriam has done some comparisons on the cost of entry into Quebec, Nieto said, and the Utica is very attractive compared to the Barnett's historical highs of upwards of $30,000 (US) per acre.
At writing, Canbriam had drilled and cased three wells in the Utica play, and was production testing two of the three wells.
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It appears from this excerpt that Gastem is in an extremely favorable position not only with the size and quality of their land package, but also to be in a partnership with Canbriam. The two companies should benefit from the developing synergy. Good luck to all those long on Gastem.
Tbonepickens