Royal Dutch Shell Tight Gas

By Eric Fox | October 04, 2010 AAA

Royal Dutch Shell (NYSE:RDS.A) plans to increase production from North America by 40% through 2014, based in part on the extensive development of various tight gas and shale basins scattered throughout the continent.
Royal Dutch Shell estimates that the company has access to 40 trillion cubic feet equivalent of resources on its properties, and hopes to double production from these areas by 2015. Ultimately, the company may reach production of 400,000 barrels of oil equivalent (BOE) per day by 2020. This pace of development is based on the future price for natural gas, and the production goals won't be reached in every scenario.

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Pinedale Field
Royal Dutch Shell entered the Pinedale Field in Wyoming in 2001. The company has 400 producing wells that it operates at this field, and another 1,000 future drilling locations. Another large operator in the Pinedale Field is Ultra Petroleum (NYSE:UPL), which produces 1.2 billion cubic feet per day of natural gas from its wells.

Marcellus Shale
Royal Dutch Shell entered the Marcellus Shale through the purchase of East Resources, a private oil and gas company, earlier in the year. The company picked up 650,000 prospective acres in Pennsylvania, New York and West Virginia. Royal Dutch Shell plans to drill 90 new wells here in the second half of 2010.

Canada
In Canada, Royal Dutch Shell has exploration and development activities across Alberta and British Columbia. One focus area for Royal Dutch Shell is the Groundbirch project in British Columbia where the company is developing the Montney Shale. Development of this and other areas in Canada should add approximately 100,000 BoE per day from 2009 to 2014.

Eagle Ford Shale
Royal Dutch Shell has 250,000 acres that are prospective for the Eagle Ford Shale in South Texas. The company is currently conducting seismic research on this acreage in the second half of 2010.

Other operators are at a more advanced stage of development of the Eagle Ford Shale. Petrohawk Energy (NYSE:HK) has 357,000 net acres in three separate project areas. The company estimates that its production in 2010 will average between 70-90 million cubic feet equivalent per day.

Haynesville Shale
In the Haynesville Shale, Royal Dutch Shell has 180,000 net acres and is in a joint venture with EnCana (NYSE:ECA). The company has 1,300 drilling locations here, and is also considering developing the Bossier Shale as well.

The Bottom Line
Royal Dutch Shell has amassed a huge portfolio of assets in tight gas basins in North America, and plans major development over the next few years to help increase production growth. (To learn more, see Oil And Gas Industry Primer.)

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