Shale, Shale, Everywhere

By Eric Fox | August 24, 2009 AAA

Most investors are already familiar with the big five shale plays in North America - the Barnett, Fayetteville, Haynesville, Marcellus and Bakken Shales - as they tend to get a lot of news coverage, almost to the point of saturation. There are, however, many other shale plays that get less publicity, but may be end up being just as productive as these better-known areas. Here's a run down of some shale plays you've never heard of. (For a primer on the oil industry, refer to our Oil and Gas Industry Primer.)

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Let's start with California, a state with a long history of oil and gas production, but not exactly considered a hospitable place currently for exploration and production. Ever heard of the Monterey Shale? Well, small cap Venoco (NYSE:VQ) has and is planning up to two horizontal wells to test it in 2009. The Monterey Shale runs from 1,000-3,500 feet thick, and Venoco has 200,000 acres under lease, both onshore and offshore.

Estimates of the amount of recoverable resources in the Monterey Shale are hard to come by, but Venoco is using a figure of 37.6 billion barrels oil equivalent in its investor's presentation for all of the Southern California area.

Moving to the Eastern United States, we have the Conasauga Shale, located in Alabama and Georgia. Energen Resources (NYSE:EGN) is developing its acreage in this shale and drilled some test wells several years ago. The company entered into a partnership in April 2009 with Chesapeake Energy (NYSE:CHK), and is required to drill another well into the Conasauga Shale within 18 months. Some confuse the Conasauga Shale with the nearby Chattanooga and Floyd Shales, but the three are separate formations.

Dominion Resources (NYSE:D) used to have significant operations in the Conasauga Shale but sold out in 2007 to a subsidiary of the Loews Corp (NYSE:L)

In the Rocky Mountain area there is the Hovenweep Shale, which overlaps the Gothic Shale in the Paradox Basin in Colorado. Bill Barrett Corp (NYSE:BBG) is testing this play in its Green Jacket Project, and will drill a horizontal well in 2009.

Bill Barrett Corp is also active in the Cody Shale in Montana, where it has 173,400 net acres under lease. The Cody Shale is an upper Cretaceous Shale that runs from 900-2,000 feet thick at depths of 3,000-7,000 feet deep. The company drilled four vertical wells in 2008, and plans a horizontal well in 2009 to further test the acreage.

Unconventional natural gas resources are the targets of a multi billion-dollar development push by the exploration and production industry. The industry is counting on these areas to supply the needs of hungry consumers in the U.S.

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