Encana's Appraisal of the TMS
Back in late 2013, Doug Suttles, president of Encana Corporation, when discussing the Tuscaloosa Marine Shale Play and plans for 2014, stated, “The big goal is to complete appraisal and make a decision about whether we want to move forward with exploitation beginning in 2015."
He went on to add, “…our geoscientists have mapped out what they believe is the core of the play, but, in my view, we don't yet have enough well data across that to confirm the tier one area, the core of the core."
Now, I don’t know about everyone, but I didn’t completely take Mr. Suttles at his word. In particular, when I saw results improving a few months ago I believed we would see an acceleration in Encana’s drilling activities in 2014. Further, in light of Encana selling its western and most of its Louisiana TMS holdings to Halcon, I believed Encana had more or less made its determination of the “core of the core” and would move forward.
Instead, Encana has, with the seeming pace of a tired slug, stubbornly stuck to its 2014 assessment plans…no acceleration...no additional rigs...just a methodical checkerboard assessment of the play.
What have they learned?
For one, they know the TMS is still a complicated, tough place to drill. But, the problems appear to be fewer…the drilling days are dropping…fracking appears to be less dramatic…easier.
They also know the results are good, especially in targeted areas, perhaps partially as a result of laterals becoming a little longer.
Things that remain to be determined may include: proven longevity of the wells/production curve over time…spacing…continuing cost reductions...These things will likely be worked out satisfactorily...or at least I believe they will.
I continue to hope and believe things are going to work out for the TMS.
I also believe Encana is the key company to its success.
Encana, while obviously a shale gambler of sorts, is much, much larger than the other companies here. The TMS is not a make or break play for Encana.
In other words, should Encana announce that the TMS is a commercial play and they are committing $X hundred million dollars in 2015 to move into the development phase of the TMS, then we’re off and running.
Encana’s 3rd quarter report for 2014 will likely be toward the end of October. (I’ll report the date when Encana announces it.) We may get a hint of where the TMS is at that time. Or, as it was last year, it could be mid-December before we know what’s happening.
I’m going to bend towards knowing something sooner rather than later, though, because a key to the success of the play is for more infrastructure to move into place here.
Folks need to make plans.
Somebody needs to be telling somebody something soon.