All's not well with natural gas drilling near Bickleton

BICKLETON, Wash. -- After spending 16 months and millions of dollars punching more than two miles into the earth in search of natural gas, Delta Petroleum says it's disappointed with the results and is putting its plans for new wells on hold.

The Denver-based company said its exploratory gas well, about 12 miles southeast of Bickleton, showed "uneconomic" levels of natural gas and has ceased plans for more drilling nearby.

"I wish it was better news," Broc Richardson, vice president of corporate development and investor relations for Delta, said Monday.

The company has not decided what to do next, Richardson said.

"We have to continue to evaluate the well and the (Columbia River) Basin in general to form our next steps," Richardson said.

"Plans for additional drilling activity scheduled for later this year and in 2010 have been curtailed pending a review of all completion and testing information," the company said in a news release Monday.

The company has received state drilling permits for four sites within three miles of the Bickleton well, named the Gray Well after the property owner, Rick Gray.

Trading on the company's stock rose to 12 times the normal volume Monday in reaction to the news. In regular trading, the company's stock price closed at $4.01, up 45 percent from $2.21, the previous close.

The company began drilling through the region's thick layer of basalt in May 2008, announcing plans to spend $18 million on the exploration. The company also partnered with Canadian giant Husky Energy Corp. to lease 850,000 acres in the Columbia River Basin. Some geologists have speculated the basin's thick layer of basalt could potentially sit atop one of the nation's largest reservoirs of natural gas.

At the time Delta started drilling, natural gas prices were high. Prices have dropped from more than $8 per million British thermal units in September last year to $3.16 today.

Richard Tucker, vice president for marketing and client relations for Ziff Energy Group, a private energy advisory firm in Houston, Texas, blames the sluggish economy and oversupply for the fall.

"We're having a recession and storage is full," Tucker said.

The results of the Gray Well contrast with earlier excitement.

Delta drill rig workers had found a combination of water and gas at various depths, the news release said. In March this year, the company announced it found high-pressure pockets of sandstone between layers of basalt that could have indicated natural gas.

However, the story was different when the company finished drilling at 12,280 feet deep, which is below the layer of basalt.

"Gas volumes have been minimal and substantially below pre-completion expectations deeming these intervals uneconomic," the company said.

The company focused most of its testing between depths of 11,580 feet to 12,280 feet, the release said.

The release said the company plans to conduct additional tests in the shallower basalt sections.

Industry watchers don't believe the company's hopes are necessarily dashed.

"I don't think it means it's over," said Hiram White, a former member of the state's oil and gas commission. "It's certainly not good news."

White said the company could feasibly still find gas trapped in pockets within the basalt layer, though in less volume than below it.

* Ross Courtney can be reached at 509-930-8798 or rcourtney@yakimaherald.com.