When Encana Oil and Gas gets its new "gas for cash" drilling program underway, it will be producing fuel for a steel making company that boasts of making recycled steel products using significantly less energy than other steel manufacturing plants.
Announced in mid November and tabbed gas for cash by the media the agreement with steel maker Nucor Corp of South Carolina also is providing a financial shot in the arm to Encana by splitting the cost of drilling up to 4,000 new wells in the Piceance Basin. No dollar amounts were included in the announcement.
The drilling, according to Encana, is to take place in Encana's 50,000 acre Big Jimmy federal unit. It's an area of combined leases on BLM and private land straddling the Garfield and Rio Blanco county line, about three miles west of Colorado Highway 13 between Rifle and Meeker, according to spokesman David Boyd of the US Bureau of Land Management.
Boyd said there currently are more than 300 wells in the unit, which was formed in 2010 by combining four existing units into one.
A statement issued by Encana reported that the deal will more than double the company's number of wells in the Piceance Basin, and provide Nucor with a reliable source of natural gas for its factories.
Encana spokesman Doug Hock in an email to the Post Independent said that "The 50 percent working interest provides them with a steady supply of gas at a moderate price. It's a physical hedge against having to go into the market at a future date to purchase gas at potentially higher prices."
But the pace of drilling is not set by the agreement.
Mr Hock said that "It will vary by year. Encana and Nucor will jointly decide each year how many wells will be drilled within a specified minimum and maximum."
