Drillers plan to increase Barnett rigs

By DAN PILLER
STAR-TELEGRAM STAFF WRITER
Two major producers in the Barnett Shale natural gas field said Wednesday that they plan to expand operations in the field adjoining Fort Worth despite a slump in gas prices this year.
Devon Energy of Oklahoma City, already the largest producer in Texas and in the Barnett Shale, said it would add at least five more rigs to its current fleet of 25 drilling rigs in the Barnett Shale.
Devon Chairman Larry Nichols said the recent purchase of Chief Oil & Gas of Dallas will add 70 million cubic feet to Devon's current daily production of 640 million cubic feet. Devon has drilled more than 2,500 wells in the Barnett Shale and has expanded beyond its original base in Wise and Denton counties to drill heavily in Johnson County south of Fort Worth.
Operators have continued to lease and drill in the Barnett Shale this year despite a retreat in natural gas prices from highs of $12-$14 per thousand cubic feet late in 2005 to less than $6 per thousand cubic feet a month ago. The price has strengthened this week on the news of heavier demand from utilities during air-conditioning season, rising to close at $7.80 per thousand cubic feet in trading Wednesday on the New York Mercantile Exchange.
Devon President John Richels said the company has seen "encouraging results" from its experiment of drilling wells as close together as 20 acres, as now allowed under new Texas Railroad Commission rules. Under the old rules, wells had to be at least 300 acres apart.
"We were getting 2.4 million cubic feet of initial production from the 20-acre wells," Richels said.
Devon on Wednesday announced a 32 percent increase in its second-quarter profit, to $859 million, or $1.92 per share. The company has 137 rigs drilling in Texas, Oklahoma, New Mexico, the Caspian Sea, China and the Gulf of Mexico.
Another Barnett Shale driller, Quicksilver Resources of Fort Worth, plans to add six new rigs to the 10 already working in Hood, Parker, Somervell and Bosque counties. President Glenn Darden said Quicksilver will drill 100 wells in the Barnett Shale this year, 15 more than originally planned.
Darden said Quicksilver recently brought in a well in north central Hood County with initial production of 5 million cubic feet per day. He said two wells spaced at 55 acres apart in southern Hood County recently had combined initial production of 6 million cubic feet.
"We're seeing consistent performance in our wells," said Darden, whose company has 285,000 acres under lease south and west of Fort Worth and has also built a processing plant near Granbury served by a 120-mile pipeline gathering system.
Darden said the processing plant, which opened late in 2005, will be expanded in capacity from the current 75 million cubic feet per day to 200 million cubic feet per day.