RE: Shut - In costs

Grigs,

I talked to Lambie (our resident produciton and reserve expert) about this and he thought it was highly unlikely that producers would shut in eastern rocks production for a couple of reasons. Apparently, if you shut in coal bed methane production there is a serious risk that the well will "water out" either ruining the well or causing 6 months to a year of production delays. Also, it seem logistically unlikely due to the small production volumes associated with each individual well (100-500 mm/d). In Chris's opinion coal bed methane would be some of the last production we would ever see shut in. Hope this helps. Let me know if you learn anything further.

Chris

-----Original Message-----
From: Grigsby, Mike
Sent: Tuesday, October 02, 2001 3:30 PM
To: Dorland, Chris; Cowan, Mike
Subject: Shut - In costs

I am guessing that you guys have market knowledge of shut-in costs for western Canada. We have heard all of the typical low price rumors of Rockies shut-ins at a dollar. I am going to put Steve South and Paul Lucci in charge of presenting a shut-in analysis by field in the Rockies and san juan. What do I need to have these guys look at in terms of variable costs. Is it as simple as gathering and processing?

Let me know your thoughts.

Thanks,
Grigsby