Frustrating era ends

ENTEK Energy CEO Trent Spry has told Energy News the company keen to restart work on its Focus Ranch oil discovery in Colorado, after the US Supreme Court supported the oiler, ending a protracted six-year land dispute with a local rancher, which at one point which saw firearms wielded.
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Haydn Black

Reporter

Yesterday the company confirmed that the Supreme Court had affirmed an earlier decision granting Entek's right to access the Focus Ranch Unit and the FRU-12-1 discovery well.

Entek's licences on federal land but split by privately owned land.

The landholder, Stull Ranches, requested the court review after August's decision by the Tenth Circuit Court Of Appeals also upheld Entek's right of access, and lost.

"They have no more legal appeals left, which is a great win for us," Spry told Energy News.

"Entek itself has never done the wrong thing in this. We have gone through it step by step, properly and diligently, and that's why it has gone out way."

There is a risk of further tactics to extend the frustrating and drawn out process, but Entek believes Stull will recognise it has been soundly defeated.

Entek now wants to get on the ground by the end of July to re-test the well for the first time since it was shut in since 2009.

The dispute originally started over an existing access road, which the rancher denied access to.

Entek offered an alternative access route, but that fell afoul of environmental regulators, so the oiler sought access to the existing road via the courts.

"This whole thing, from the Tenth Circuit Court all the way up to the Supreme Court, has been about getting everyone aligned, to get our rig across a surface owner's property to get to our Federal Minerals Licence elsewhere in the unit," Spry said.

"What this has essentially done is allow us to use the existing road again, although there is as small part of road we need to build to connect two piece of existing road on federal land, but other than that we are ready to go," Spry said.

That road needs federal approval, but Entek has advanced that work substantially and believes approvals should be rapid.

Re-testing FRU-12-1 is vital to the company.

The well flowed at 240 barrels of oil per day and 2.75 million cubic feet per day in 2009 from multiple unstimulated intervals, demonstrating the potential of the Niobrara Shale and the embedded igneous intrusive sills in the area.

Spry said FRU-12-1 was tested poorly, but even then the upper zone alone flowed 100 bopd and 1MMcfpd of gas.

"The first thing we will probably do is go back and test that zone again, because that is the easiest and safest thing to do, confirming how significant the flow rates should be from the Niobrara and the volcanic sills," he said.

"It may be all we need to do to prove the potential of the well, because it is such an old well there will be more risk in the deeper zones, but we should be able to extrapolate the data for future wells."

A new well, 11-14, has been permitted to the west of 12-1, although the permit will need to be renewed.

It has good access, is on federal ground and has no issues with the endangered sage grouse, which nests in the area, and could be drilled later in the year.

The company still has around $7 million in the bank, which should easily cover the test of the 12-1 well and the new well.

Further north, in Wyoming, where Entek has the Battle Mountain joint venture, drilling is expected to begin in July.

Operator GRMR Oil and Gas is free-carrying Entek through three wells, including the first horizontal well.

The first pad has been created, and drilling should start from July 1, once sage grouse breeding season is over.

Entek and its partners are focused on the naturally open fractures with conventional targets compared to the Niobrara unconventional potential.

"We know we can stimulate and drill some horizontal wells down the track, but really we want to target the open fractures, which is why we shot the 3D with our partner," Spry said.

"These wells, once they are in the production phase cost round $3 million, which is good in this environment.

"That's one of the key things at Focus Ranch. The two analogues we are looking at in the US that have volcanic sill, if there is stimulation needed it is basically a wellbore damage clean-up, and they flow incredibly well, so we are quite excited about this."

The unique geology of the area is similar to the Dineh-Bi-Keyah field in Arizona, which producing from a porous and fractured 75 feet [23 metres] thick volcanic sill in the Lower Pennsylvanian strata.

DBK, which is smaller and lacks the thicknesses seen at Focus Ranch, has produced more than 18.5 million barrels of 45° API oil from 26 vertical wells.

At Focus Ranch the sills, which are embedded in the oil charged Niobrara Shale, reach a thickness of up to 160m and cover an area of around 23,000 acres, 10 times the size of the DBK field.

"We have been working probably harder than we have ever worked getting everything ready," Spry said.

"This is the year where it will finally all come together."

Entek shares rose more than 20% yesterday to $0.026, valuing the company at $12.7 million.

Entek also has some minor production in the offshore Gulf of Mexico, which is generating a small amount of cashflow.

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