The New Albany Shale is a long-standing producer in the Illinois Basin. Wells in southwestern Indiana and western Kentucky have flowed gas from the formation for more than a century. The shale is Devonian in age and correlates to the Antrim Shale in Michigan and the Ohio Shale of eastern Kentucky. Interest in the New Albany surged in the early 1990s, after the Antrim Shale proved to be an economic target in Michigan. However, many wells from this era were disappointing, plagued by high water production and spotty and unpredictable gas production. By the close of the 1990s, activity had dropped dramatically. Now, horizontal drilling appears to be rejuvenating the play. Several firms have been accumulating acreage positions and drilling horizontal wells, and Indiana and Kentucky look to enjoy a busy year of shale drilling. A leader in this latest round of activity is Houston-based El Paso Corp. The company has focused on southern Indiana, where it has accumulated 225,000 gross acres prospective for New Albany. El Paso launched its play with three exploratory wells in 2004, and all three tested at initial rates that were commercial. It selected one of the exploratory areas in Daviess County for a pilot program, and drilled four development wells there. The wells reached true vertical depths of around 2,000 feet, and featured laterals 4,500 feet in length. It tied its first production from its pilot into sales at the tail end of 2005. Four wells were producing 1 million cubic feet of gas per day, the company reported in an analyst meeting in mid-January. This year, El Paso plans to drill five exploratory New Albany wells and launch a second pilot based on results from these. It expects to drill a total of 13 development wells during 2006, spread between the currently producing pilot and the new area. Per-well costs are estimated at $900,000. Because of the size and scope of the play, El Paso took on an industry partner in 2005. It sold a 50% interest in the play, both to reduce its exposure and to leverage its technical resources. Coincidently, Houston-based Pogo Producing Co. recently announced that it has acquired a 50% interest in 225,000 acres. A research report by Morgan Stanley & Co. noted the initial results on Pogo's new acreage were encouraging, yielding per-well rates around 375,000 cubic feet of gas per day. Based on per-well reserves between 300- and 500 million cubic feet, Morgan Stanley estimated that Pogo's New Albany leases could hold 200- to 500 billion cubic feet of net unrisked reserve potential. One firm that has operated in the play for years is also turning to horizontal wells. Aurora Energy Ltd. of Traverse City, Michigan, has worked the New Albany Shale for the past decade. In October 2005, Cadence Resources Corp. closed on a reverse merger with Aurora. According to the company, which holds 270,000 net acres in the New Albany play, horizontal drilling is the key to commercial production. It has drilled a horizontal pilot program in Indiana, with well costs in the range of $750,000 each. The horizontals produce at peak rates between 200,000 and 300,000 cubic feet of gas per day. Other large operators reported to be active in the play include Enid, Oklahoma-based Continental Resources; Occidental Petroleum Corp. by way of its acquisition of Tulsa-based Vintage Petroleum; and Denver-based Forest Oil Corp. And, Rex Energy, an independent based in State College, Pennsylvania, holds 90,000 gross acres prospective for New Albany. It expects to start a drilling program this year. While new faces move in, an old face is moving out. Fort Worth-based Quicksilver Resources Inc. has been active in the New Albany for years, but it recently announced its intention to sell its position. Quicksilver holds 195,000 net acres, extending from Indiana's Harrison, Washington, Floyd and Crawford counties, into northern Kentucky's Meade, Hardin and Hart counties. Since entering the New Albany in 1995, Quicksilver drilled or acquired more than 220 wells in the play. Mid-year 2005, its production was 7 million cubic feet of gas per day from its Corydon Field in Harrison County, Indiana. The company says it wants to use proceeds from the sale of its New Albany position to fund its burgeoning shale plays in the Fort Worth and Delaware basins in Texas.