In the DOE Digest section of this newsletter, we reported that 40% of today's natural gas production is coming from unconventional formations—shale, coalbed methane and tight gas. And that fraction is going to continue to grow. The drivers for this phenomenal growth are substantially higher commodity prices than five years ago and technology advancements in fit-for-purpose horizontal/directional drilling equipment. It was pointed out in an earlier newsletter that most of those technology advancements were developed offshore and more recently adapted for onshore—directional tools, pad drilling and other efficiencies. While the rig count itself is growing, the fraction of the wells being drilled non-vertically increased from 26% in 2005 to 29% in just the first quarter of 2006. And if you look regionally at the unconventional areas such as the Barnett Shale and Piceance Basin, the percentage is as high as 85. With the commodity prices holding, directional drilling and completion technology continuously improving, operators are going to the "look-alike" reservoirs such as the Woodford Shale in Southern Oklahoma and Fayetteville in Arkansas.

Newfield Exploration Company has been taking the lead in the Barnett-like Woodford shale, spending $203 million since June 2003 to delineate their net 110,000 acres and begin the horizontal development. The first seven horizontal wells were producing 20 MMcf/day within 60 days. They believe they are draining 35–40 acres with each lateral at a 30–40 percent recovery rate. They expect to spend an additional $200 million in the play in 2006 and will increase the working rigs from six to 10 and eventually to 14 in 2008 while simultaneously constantly improving drilling and completion time, tubular investment and safety.

are running five rigs with five more to be delivered. The process is to drill 10–22 wells from a single three-acre pad. The rig drills four wells directionally then, using a rail system, moves under its own power to the opposite end of the pad to drill four more while the first four are being completed. Williams estimates reserves of 44.8 BCF/section on the 10-acre spacing. The process also has big environmental advantages. They utilize one road and one pad per quarter section, resulting in a 75% reduction in surface disturbance, important in environmentally sensitive areas as well as populated areas. It is clear that the improved recovery of the unconventional resource will continue to drive the development of the fit-for-purpose rigs.

Fundamentals of Formation Testing is the first installment of the Principles of Log Interpretation reference series, which replaces the classic Log Interpretation Principles/ Applications books Schlumberger published in 1989. At 275 pages and 260 illustrations, the new book is sufficiently comprehensive for cross-disciplinary use, yet it offers relevant applications and examples for more experienced reservoir engineers.