More natural gas prospecting on horizon

Expect more natural gas exploration in the Columbia Basin.

Recent corporate jockeying will mean drilling at least two more natural gas wells, though companies have not decided where or when.

Delta Petroleum recenlty announced transactions that will result in two more exploratory wells somewhere in a vast swath of southcentral Washington, where some suspect is the country's largest untapped natural gas reserve.

"We want a large stake in all this," said Broc Richardson, vice president of corporate development and investor relations for Denver-based Delta.

Delta owns the state's only active exploratory natural gas well, located about 12 miles southeast of Bickleton.

That well, named the Gray Well after the property owner, is now about 7,000 feet deep, state regulators said. It has resumed drilling after a July flash fire sent four rig workers to hospitals.

Richardson would not say whether any of them have returned to work. A state Labor and Industries investigation is ongoing, said Elaine Fischer, a spokeswoman for the agency.

The company plans to spend about $18 million drilling as deep as 15,000 feet. Work started in May.

Delta will wait until they have results from the Gray Well before deciding where to drill next, Richardson said.

But two recent corporate deals means the company will drill again, he said.

In the first, Delta purchased all Columbia Basin lease holdings from Canadian firm EnCana, bringing Delta's total leaseholds to 844,000 acres. In the same deal, Delta also received five existing exploratory wells drilled by EnCana or its partners.

Then, in a second transaction, Delta sold half its interest in the Columbia Basin to Husky Energy, a Canadian company that is "much, much, much larger than we are," Richardson said. The partnership gives Delta more money to explore, as well as build more wells and pipelines quickly if they find commercial quantities of natural gas.

Industry watchers and investors are excited because it all will lead to more exploration.

"In my opinion, it means greater opportunity for wells to be drilled," said Hiram White, a Tampico rancher, former member of the state Oil and Gas Commission and a founding member of Washington Independent Producers and Royalty Owners.

Delta and Husky may resume exploratory work on two of those five existing wells or start from scratch somewhere else.

As part of the deal, they will get three inactive, but open, wells drilled by EnCana in 2006 and 2007, as well as two capped wells drilled by Shell in the 1980s.

Shell had been partnering with EnCana on the two capped wells. It will partner with Delta now, Richardson said.

Those two wells still may pay off, Delta officials believe.

In the 1980s, Shell explorers found a "pay package with gas-charged sand," Richardson said. At the time, however, it would have cost too much to tap.

"In today's world," with higher natural gas prices and new technology, those wells might be worth a closer look, he said.

All the speculation, however, pales in comparison to proven drilling in other parts of the country. Most of Delta's work is in Wyoming and Colorado.

Meanwhile, EnCana leaders simply wanted to focus their resources in Texas and Louisiana, said Allen Boras, a company spokesman.

"We had other priorities," Boras said.

They considered their three wells "not commercial," he said.

Delta and Husky have until March to decide what to do with those three wells.

The companies have assumed responsibility for bonds posted with the state for those wells, Richardson said.

State regulators had been pressuring EnCana to either continue work on those wells or plug them, giving them a deadline of March 2009 to declare plans. Delta now has the same deadline, said Dave Norman, the state's oil and gas supervisor.

Delta also had a 2007 permit to drill a site southeast of the Gray Well but it has expired.

Delta's activity is the only of its kind in Eastern Washington, Norman said. Two companies have eight pending drill permits along the Pacific Coast in Grays Harbor and Wahkiakum counties.

* Ross Courtney can be reached at 930-8798 or rcourtney@yakimaherald.com.

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