Barnett Shale

Devon sees rise in Barnett Shale output

Devon Energy Corp. believes its net Barnett Shale production will nearly double over the next several years to as much as 2 billion cubic feet equivalents a day, reports SNL Financial investment bankers. With 7,500 risked drilling locations, the company has more than 10 years of drilling inventory in the North Texas shale play. Devon has 36 rigs running and has drilled 1,500 horizontal wells in the Barnett Shale. The company said it plans to drill between 630 and 660 wells in the play during 2008.

In Oklahoma, the company has six rigs drilling in the Woodford Shale. Devon has drilled 79 horizontal wells in the play and plans to drill 120 wells in 2008. "We anticipate continued growth in both areas," Devon spokeswoman Alesha Leemaster told SNL's Toni DeSalvo.

-- Jim Fuquay

Carter Avenue update

City Planning and Development Director Susan Alanis sent an e-mail to East Side residents regarding the discussions about the Carter Avenue pipeline and the Thomas well site, which is next to Tandy Hills Park.

There was lots of reaction among East Side e-mailers to Alanis' description of the dirt work being done at the drill site as "soil testing."

Read it here: Carter_Avenue_Alanis_memo.doc

Shhhhhhhhh! We've got big news

The Southwest Fort Worth Alliance reports in an e-mail to members that it is "THRILLED TO ANNOUNCE" that it has endorsed a "SUPERIOR OFFER & LEASE" from Vantage Energy and its land company, Caffey Group. The group just isn't so thrilled that it wants to release any of the terms. So until that moment, know that more than 20 neighborhoods in the alliance, which claims more than 6,000 acres, have an offer that tops the $25,000-an-acre bonus and 25 percent royalty on a three-year term that we previously reported. It "also exceeds all other offers in contractual concessions and in  environmental and safety considerations," the e-mail says. Informational meetings and signings are to be set during the next two weeks.

Vantage is a Denver company started by Roger Biemans, a former top exec with Encana Oil & Gas USA. According to a Denver business magazine, Biemans in December said it raised $460 million from Quantum Energy Partners of Houston, Carlyle Group, Lime Rock Partners and Riverstone Holdings. Riverstone also is backing Titan Resources, the Fort Worth company that has won several large neighborhood endorsements in recent months. Titan also uses Caffey for land services.

-- Jim Fuquay

Carter Avenue update

Jerry Horton, one of the homeowners fighting a pipeline beneath her front yard on Carter Avenue, settled with the pipeline company this morning, the same day she was to appear in court for a condemnation hearing.

Officials with Texas Midstream Gas Services, a division of Chesapeake Energy, have said the line will be bored beneath the front yards of 44 homes and vacant lots, and the line will cause little surface disruption.

"All parties are satisfied with the agreement and Ms. Horton was charming," Chesapeake spokeswoman Jerri Robbins said Thursday morning.

Horton said Thursday morning she only agreed to give up the right-of-way for the pipeline after realizing that there is almost no legal way to keep the natural gas pipeline company from building its gathering line beneath her home.

"I am heartbroken," she said. "I had to sign."

The settlement guarantees a payment of $15,500, or $150 per linear foot.

It also says:

-- The line will be at least 20 feet deep

-- There will be no surface appurtenances, such as vent pipes, in Horton's yard.

-- Texas Midstream will replace for any trees that die within six months.

Horton's case is unusual because it involved an easement through her front yard. It sparked national news coverage and it came at a time when Fort Worth city officials are debating what, if anything, they can do to regulate the web of natural gas pipelines being built in Fort Worth.

There are more than 1,100 natural gas wells either existing or planned in the city limits, and more are expected as companies rush to tap into the Barnett Shale gas field.

Texas Midstream, like many companies that build gathering lines for natural gas wells, is considered a utility company under state law and has the same right to condemn property as other utilities such as Atmos Energy or TXU.

At least four homeowners on Carter Avenue have still not agreed to allow the line, and there are several other pipelines being developed in Fort Worth, including through the Greenway neighborhood on the northside, and through the Westcliff neighborhood just south of Texas Christian University.

Read previous stories here:

Eastside_neighbors_oppose_natural_gas_pipeline.htm

-- Mike Lee

Grande Energy gets up to $250 million for future projects

Grande Energy of Fort Worth said Wednesday it struck an agreement with oilfield services giant Schlumberger and a U.S. subsidiary of Japan’s Mitsubishi Corp. to spend up to $250 million over 10 years on shale gas and other unconventional gas plays in North America. Grande President Robert Gaudin said the deal “brings together key players in land, energy financing and oilfield services.” Grande Energy Exploration & Production Co., an entity created for this agreement, will locate prospects, Mitsubishi will finance land acquisition and development, and Schlumberger will handle drilling, completion and other technical operations, Gaudin said.

See Thursday's Star-Telegram for the full report.

-- Jim Fuquay

New face Titan Operating is looking titanic

For a new company, Titan Operating is up and running like a veteran. In the past month it has won the endorsement of big neighborhood groups in Colleyville and North Arlington, and this week announced the financial backing of Riverstone Holdings, a $15 billion private equity firm with sizable energy holdings. Chalk up the fast start to Titan's founders, all experienced Barnett Shale producers. Titan Chairman Hollis Sullivan is also president of Wichita Falls-based Hollis R. Sullivan Inc., which in July was named as one of the sellers of $800 million worth of producing properties and leases in the Barnett Shale to XTO Energy. Other Titan co-founders are Christopher Hammack, former vice president of drilling and completions for Range Resources, and Mark Schumacher, who headed EnCana Oil & Gas USA’s Barnett Shale operations. Riverstone did not disclose the amount of its investment in Titan, but said it “made a significant capital commitment to Titan,” which it said will focus “on acquisitions and development in the Barnett Shale.”

Click here for the Star-Telegram's report on the transaction: Download titan_resources.doc

-- Jim Fuquay

Outspoken pipeline critic comes to the table

Carter Avenue resident Jerry Horton has become the face of the anti-pipeline movement gaining speed in the Barnett Shale.

It looks like the movement may need to find another spokesperson.

Horton is meeting with Chesapeake tonight and might sign an agreement to allow the company to build a pipeline under her east Fort Worth front yard as early as later this week.

Chesapeake filed a condemnation lawsuit against 72-year-old  Horton last month after  Horton turned down more than $12,000 for the right of way.

Horton has appeared at several gas drilling events and city council meetings pleading with the city to block Chesapeake's pipeline request.

Horton and other residents are concerned about safety and the effect on their homes’ value. They also object to Texas Midstream and other pipeline companies in the Barnett Shale having the same right to condemn property as other utility companies, even though the lines are only used by one company.

-Aman Batheja and Mike Lee

Concerns of oversupply emerge

As producers sing the praises of shale gas, a growing number of investors are asking if the industry is at risk of oversupply. Read the Star-Telegram's report here: Download surge_fuels_worries.doc

--Jim Fuquay

Will the shale plateau?

Reuters quizzed the CEOs of several Barnett Shale about when they believe the field's production will plateau.

A couple of them said 2012 or 2013. Read the full story here: http://in.reuters.com/article/rbssEnergyNews/idINN1335858620080814?pageNumber=1&virtualBrandChannel=0

-- Mike

A new type of gas for cars?

The Wall Street Journal reports today about a ballot proposition in California that would provide incentives for cars to run on compressed natural gas. Two of the backers have local ties: T. Boone Pickens and Chesapeake Energy, which is a big player in the Barnett Shale gas play here in Fort Worth.

Read the whole story here: WSJ_California_gas.htm

-- Mike