Top executives from several operators working resource plays described modest outlooks for activity at an unconventional gas forum at the 2010 Colorado Oil and Gas Association (COGA) meeting held in Denver in July. Exceptions make the rule, of course, and exceptions to the ho-hum trend will be the Eagle Ford, Marcellus and Haynesville shales.

“The Eagle Ford has doubled the size of our company over­night,” said Jay Still, executive vice president, domestic operations, for Pioneer Natural Resources. The Dallas-based operator had been busy chasing the Edwards Reef in South Texas, and until recently considered the Eagle Ford just a drilling problem.

That’s all changed now. In fall of 2009, Pioneer’s first successful Eagle Ford well tested 11.3 million cubic feet per day, and its recent #1 Handy flowed 19.9 million cubic feet of gas equivalent per day. The company currently operates five rigs in the liquids-rich part of the play in Live Oak, Karnes and DeWitt counties.

Recently, Pioneer signed a joint-venture agreement with Reliance Industries Ltd. of India. Pioneer and Reliance will also develop a midstream business that will initially consist of gathering and treating facilities.

El Paso Production Co. is also active in the Eagle Ford, noted Frank Falleri, vice president, central U.S. The company has 165,000 acres in the play’s gas/condensate window. It currently runs two rigs and plans to expand its activities in 2011.

In the Haynesville play, Encana Oil & Gas (USA) Inc., subsidiary of Encana Corp., plans to double production, said Paul Sander, vice president, Midcontinent. The company will drill 110 net wells, mainly via multiwell pad drilling. Typically it drills 4,000-foot laterals and treats them in 13 to 16 frac stages. Sander said that the company has reduced drilling and completion costs in the play by about 40%.

Meanwhile, El Paso has a four-rig Haynesville operating program. Improvements in drilling and completion procedures have made it possible for the company to drill and complete a well in 27 days, said Falleri.

The Marcellus will also deliver growth. Despite recent concerns about Marcellus frac operations in the densely populated northeastern U.S., Chuck Meloy, senior vice president, worldwide operations, Anadarko Petroleum Corp., described the economic benefits of drilling as a growth engine. “From our operations alone, we will produce more than 1 billion cubic feet of gas, create more than 200 new jobs over the next 10 years and add $1.8 billion in lease and tax dollars to the Pennsylvania economy.”

Anadarko operates six to 10 rigs in the play and has plans to drill 60 operated and 125 nonoperated wells, primarily in Bradford and Tioga counties, Pennsylvania. Meloy noted Anadarko recently signed a $1.4-billion joint-venture agreement with Mitsui & Co. Ltd. The Japanese firm will earn approximately 100,000 net acres in exchange for funding 100% of Anadarko’s share of development costs in 2010, and 90% of these costs thereafter.

The backdrop to this activity is a muted forecast for natural-gas prices. Low demand will limit prices through 2012, said Jen Snyder, principal gas analyst, Wood Mackenzie.

“The core, low-cost unconventional gas plays—Marcellus, Haynesville and Barnett—will continue to grow.” At the same time, higher-cost plays such as the Piceance and Uinta basins’ tight-gas reservoirs will see little drilling. Cost pressures will also intensify due to service costs and margins, competition with oil projects for horizontal drilling rigs, and a stronger economy.

However, the cycle will swing round again. U.S. gas prices could shift upward by 2013, and advance to about $6.50 to $7 per million Btu over the following few years. Economy-wide inflationary pressures mean that, in nominal terms, prices could reach $8.50 per million Btu.

The improved prices will largely be driven by more robust demand, especially from the power sector. By 2020, additional gas demand for electrical generation could be between 8- and 10 Bcf per day, as aging coal-powered plants are retired. Even in the absence of carbon legislation, EPA and local regulations could lead to 45 gigawatts of coal-fired power generation coming off line in the next decade.

“As the pace of demand growth accelerates, more expensive shale and tight-gas supplies will be required,” she said.