Assets
Forest
City Basin
Forest
City Basin
Sefton Resources, Inc. is in the process of evaluating the potential of
Coal Bed Methane resources in the Forest City Basin area of eastern Kansas.
Kansas has more than 53 billion tons of deep coal reserves located within 32
different identified coalbeds. Based on analytical test results, drill cores,
and geophysical logs, a study concluded that the Forest City basin contains
substantial amounts of coal within the numerous coalbeds that are too deep and
too thin to be mined for their coal content by conventional methods.
Currently,coalbed methane accounts for about 7.5 percent of U.S. natural gas
production.
Most of the coal located in the Forest City Basin area within Kansas was
deposited during the Pennsylvanian Period of geologic history, also known as the
Coal Age, about 305 million years ago. These deposits were formed from
vegetation that once grew along the edge of a brackish sea. It took about 10
feet of vegetation to ultimately form about 1 foot of coal. All of the coal
found in eastern Kansas is bituminous, which is slightly softer and able to
produces less energy than anthracite coal.
According to Larry Brady of the Kansas Geological Survey, “some types of
bituminous coal, including those in Kansas, are ideal for methane to be present
in large quantities.” Therefore, an increasing level of interest from coalbed
methane producers has spurred interest in the Forest City basin as a potential
producer of commercial quantities of coalbed methane. So far, more than a dozen
major CBM producing companies are currently active in the Forest City Basin
play. Since 2001, unconventional gas production in Kansas has doubled each year,
to just over 9 Billion Cubic Feet (bcf) in 2003. That kind of production
attracted a lot of attention, and some of the biggest players in coal bed
methane quickly moved into the play, leasing up large land positions in the
Cherokee and Forest City Basins.
No one is denying Kansas’ potential. An edition of Oil and Gas Investor magazine
listed the Cherokee as one of five CBM basins that are “poised to deliver the
next wave of growth” in the lower states. The Forest City Basin appears to be a
great potential location for the production of Coal Bed Methane for several
reasons. First, although the coalbeds present are typically thin, the cyclic
nature of the deposits makes it possible to intersect multiple coal seams within
a single well. Also, the Forest City Basin area of Kansas would be an
advantageous CBM production location because it currently has a network of
pipelines in place to transport the gas produced, and there are plenty of
recognized zones for disposing of waters that are produced by the extraction of
the CBM. (see CBM technological info.) Finally, the land in the Forest City
Basin area is largely privately owned, which means that the acquisition of land
can be done at a much lower cost and at a much quicker lease-negotiation rate
than other CBM producing locations, like Wyoming, where there are vast areas of
government owned land.
Tim Carr, of the Kansas Geological Survey finds that “Eastern Kansas is probably
now the “hottest play” in the coal bed methane industry, which is surging
because high prices in the natural gas market make new exploration profitable.”
Also, according to Carr, “If you can get it to work, you can put in lots and
lots of wells, and they go on forever. Some wells from the late 80’s or early
90’s are still making gas.” Once solid flow is established in a CBM well, the
production tends to last. However, the full extent of the potential of the
Forest City Basin area’s production will largely be determined the old fashioned
way - at the drill bit.
Anderson and Franklin County Project
Initial Hypothesis
The initial hypothesis for the Anderson and Franklin County, Project was a
structure analogous to the prolific Bush City field located in southern Anderson
County. The structure was based on geophysical data owned by Sefton. The
attraction to the area was enhanced by the fact that the project lay within the
Forest City Basin, an area known to have coal deposits similar to those being
developed in the coalbed methane (CBM) play of the Cherokee Basin located in
southeast Kansas. Based on this premise Sefton initiated a lease acquisition
program that covered 12 sections or 7600 acres.
Supplemental Data
Support for the original hypothesis and project area was confirmed when Sefton
learned of a number of coalbed drilling programs located in the vicinity of
TEG’s acreage. When Sefton acquired a University of Kansas Master thesis
detailing (extensive geological write-ups and individual coal maps) the presence
of productive coals within Anderson and Franklin Counties the project/buy area
was increased to 60 sections.
In House Confirmation
Interested in substantiating industry interest in the area and in verifying
published data, Sefton initiated its own geologic study. A review of the
Anderson and Franklin County project area, as defined by Sefton, was conducted
by Nafi Onat of Sure Engineering, LLC. The results of this analysis continued to
support the initial hypothesis and the decision to expand the project buy area.
TEG has completed a detailed analysis (geologic and economic) and plans to
initiate a development plan.
Land Acquisition
Sefton made the transition from a buy area of 7600 acres to a buy area of 40,000
acres. There was and continues to be little evidence of leasing competition and
when the lease acquisition program started the vast majority of the
interests/lands were un-leased. Utilizing two brokers, Sefton has contacted most
of the mineral owners and has acquired to date in excess of 30,000 acres. Leases
have been acquired with very competitive bonus and brokerage costs. All leases
are for a minimum of five (5) years with most having an option to extend for an
additional five (5) years. The acreage is situated such that Sefton has coverage
on both the conventional oil and gas anomaly and on the thicker Bevier and
Riverton coal deposits. The existence of abandoned or temporarily abandoned
well-bores on the leased acreage will provide Sefton with the opportunity to
test various potentially productive zones and conduct CBM pilot/test projects at
minimal risk and expense.