XTO's CEO Bob Simpson started it, you could say, with his thinly veiled comments during XTO's quarterly report conference call. "That's ridiculous," he said, referring to estimates by an unnamed company predicting 250 trillion cubic feet of gas in place for the Haynesville shale. Said Simpson: "Nobody in their right mind has the foggiest idea" so much gas in place exists. For reference, that compares with 50 Tcf estimated for the Barnett shale. That unnamed person, of course, is Chesapeake Energy's CEO Aubrey McClendon, who has confidently touted the big number in the hot new shale play, in which Chesapeake has the commanding lead. Simpson continued to say "hype artists in the shale plays" are creating a tailspin in natural gas prices. "You have to be careful following some of these people. It's dangerous. Our credibility is on the line with that kind of hype." McClendon took it personally. In his conference call Friday, he fired back: "As to recently expressed doubts about our calculations for Haynesville gas in place, if you had studied the 100 existing Haynesville logs and taken Haynesville shale cores from your first four vertical Haynesville wells and had been able to evaluate them in your own proprietary shale laboratory, then maybe you would have been able to do the same math for gas in place and recoverable gas that we have. "Our experience and analysis tells us that on average every square mile of core and Tier 1 Haynesville shale has an average of 180 billion cubic feet of gas in place. From that gas in place we are estimating that we will recover about 52 Bcf per square mile to the drilling of eight wells per square mile. This would result in per well average recoveries of about 29% of gas in place which is consistent with expected Barnett recoveries although Barnett drilling is 50% more dense than planned Haynesville drilling. "With about 3 million acres in (core area identified by Chesapeake), that’s about 4,700 square miles. At 52 Bcf of recoverable gas per square mile, that equals about 245 Tcf of recoverable gas in the Haynesville, exactly consistent with what we have predicted from the beginning. So instead of this number being hype, it is an entirely reasonable number based on thorough scientific examination reinforced by actual drilling results to date. Those who have followed Cheseapeake know how conservatively we have historically been in estimating the initial potiential of the Barnett, Fayetteville, Woodford and Marcellus shale plays. Our approach with the Haynesville has not changed." McClendon highlighted one of its last two out of 11 wells drilled in the play as producing 14 million cubic feet per day after one week of production, completed with eight stages on a 24/64th choke. He said out of 2,000 wells Chesapeake has drilled into shales, "this is the best shale well we have ever drilled. We know of no other well in any other shale play that has averaged more than 9 million cubic feet per day over the first several weeks." Negative comments about the Haynesville last week "had some people express concerns to us," he said. "When you consider who all is involved in that play and the well results to date, its not very smart to start dogging that play because the well results to date are so exceptional and are only going to get better over time." So there. That's some good smack coming from some heavy hitters. Maybe Simpson will keep it fun and announce another billion dollar deal to add to its YTD total of some $10+ billion---maybe this time in the Haynesville.
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