Barnett Shale in Texas: Example of Unconventional Energy Play

by Robert Francis  on Monday, Aug. 27, 2007 12:00 am  

The tall, imposing drilling rig that appeared just east of downtown Fort Worth in the summer of 2006 didn't quite overshadow the towering skyscrapers of the city, but symbolically it might as well have.

Fort Worth - currently the fifth fastest-growing city in the United States among those with more than 100,000 people - sits atop one of the fastest-growing energy plays in the country, known as the Barnett Shale. Work in the Barnett Shale Play began to have a real impact in 2006, and any skeptics appear to be hiding under the nearest shale rock.

"This is going to be here a long time," Mayor Mike Moncrief said. "Our grandchildren will still be reaping the benefits of this."

Others began to take notice as well. The Barnett Shale has become more than just the hottest natural gas play in the nation; it has become one of the hottest news stories as well. The New York Times, The Washington Post, The Wall Street Journal, National Public Radio and ABC News have all done stories on the swath of gas-laden black rock known as the Barnett Shale.

The Barnett Shale is a rock formation more than 7,000 feet beneath ground level. It is considered to be the largest unconventional resource play in North America, and some say it may rival Alaska's North Slope in potential gas resources. Active drilling in the area now covers about 20 counties and more than 7 million acres in North Texas. Current natural gas production is estimated to be about 2 billion cubic feet per day from more than 6,000 wells. About 170 rigs are running night and day to tap into a potential reserve base of 26 trillion to 30 trillion cubic feet of gas.

Signs Seen in the '80s

That drilling activity didn't occur overnight. In the early 1980s, George Mitchell and his company, Mitchell Energy, were intrigued by the widespread gas indications as they drilled for other energy targets in the area.

There were plenty of challenges. But horizontal drilling improvements and new fracing technologies have started to crack - sometimes literally - the secrets of the Barnett Shale.

Mitchell Energy's assets were eventually acquired by Devon Energy Corp. of Oklahoma City, which is currently the largest driller and producer in the Barnett Shale. Devon has 30 rigs running in the Barnett Shale and reached its 2007 production goal of 800 million cubic feet per day in the second quarter.

Other large players in the Barnett Shale include Fort Worth-based XTO Energy Corp., EOG Resources Inc. of Houston and Chesapeake Energy Corp. of Oklahoma City.

And as the Barnett Shale Play began to attract attention, and energy companies, oil and gas property values soared. In 2000, the Texas comptroller of public accounts calculated those values at $1.2 million for Tarrant County. In 2005, those values grew to $741.8 million.

Some of that growth has slowed after an 11 percent drop in natural gas prices in 2006. For example, mineral values in Tarrant County are up only 18 percent in 2007, after doubling in each of the previous two years.



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