EnCana tapping new production and long-life reserves in Greater Sierra region of northeast B.C.

Greater Sierra daily production expected to double in next three years

Calgary, June 4, 2002 - EnCana Corporation (“EnCana”) has completed a major land acquisition program along the Devonian Jean Marie reef margin in the Greater Sierra region in northeast British Columbia. The company now holds more than 2 million net acres of land on the Greater Sierra play and is firmly established as a leading explorer, producer and landholder in B.C. – one of the fastest growing gas producing regions in North America.

“We believe that the Greater Sierra natural gas field is a world class discovery which will be a key element of our long term gas growth strategy. The region’s resource potential on EnCana lands is estimated at more than 5 trillion cubic feet of sweet gas in place, and we expect to recover more than half of that,” said Randy Eresman, President of EnCana’s Onshore North American division

EnCana considers that its Greater Sierra lands contain the largest regional gas play discovered in Western Canada in the past decade. For the last four years EnCana has been steadily acquiring mineral rights and extending the productive area of this play.

“We first entered the Greater Sierra play in 1998 and each year our technical and operations teams have improved their understanding of the play, moving from the lower productivity carbonate platform to the more prolific reef margin. We are now in a position to predictably grow reserves at attractive full cycle finding and development costs of between C$1.25-$1.50 per thousand cubic feet,” Eresman said. “To date we have booked about 600 billion cubic feet of established gas reserves in Greater Sierra.

“We had a very successful winter drilling program in this seasonal access area, drilling 45 wells and adding about 150 billion cubic feet of established reserves. Approximately half of these wells targeted the reef margin. We expect that daily gas production from Greater Sierra, currently about 150 million cubic feet per day from approximately 200 wells, will more than double in the next three years, and continue to grow after that. To date, 500 potential drilling locations have been identified and current plans are to drill about 100 wells a year. We are well positioned with infrastructure as the company owns seven gas plants with about 200 million cubic feet per day of processing capacity in the area. As well, we have long-term transportation commitments with Duke Energy Gas Transmission in B.C. and TransCanada PipeLine’s Alberta system,” Eresman said.

The Greater Sierra development taps the extensive Upper Devonian Jean Marie formation, a gas-rich carbonate present throughout much of northeast B.C. The most prolific wells are located east of Fort Nelson, B.C. along the reef margin that is about 3 to 5 miles wide, extending more than 175 miles south from the Northwest Territories border to the disturbed belt of the Rocky Mountains. Typical wells in the reef margin will produce from 2 million to 4 million cubic feet per day in the first year and then stabilize in the range of 1 million cubic feet per day with a reserve life of greater than 10 years. Each square mile of productive land on the reef margin contains an estimated 5 billion to 10 billion cubic feet of gas in place. To date, EnCana’s success rate along the margin has been in the order of 90 percent.

The Jean Marie Formation can be compared to the modern day reef complexes of Australia’s Great Barrier Reef. The reservoir’s unique characteristic is that it is under-saturated with respect to water, resulting in up to 40 percent more natural gas per unit area in the rock compared to normally saturated formations.

EnCana has developed an expertise in the exploitation of non-conventional gas reservoirs, such as the Jean Marie trend. The company has been able to unlock the tremendous resource potential of this area through its innovative drilling techniques and its design of large development programs that benefit from economies of scale. EnCana has applied its technical expertise by drilling horizontal and under-balanced wells. Without the innovative application of these two technologies, the development of Greater Sierra would have been uneconomic. Horizontal drilling in this area involves drilling vertically for about 1,400 metres before turning the bit to then drill horizontally for about 1,000 metres through the gas-bearing rock. Under-balanced drilling uses inert nitrogen foam instead of a water-based drilling mud. The use of conventional water-based muds in this type of formation would create a water phase trap that would severely reduce the productivity of the gas wells.

“Relative to other major fields in the Western Basin, Greater Sierra has comparatively few wells drilled,” Eresman said. “We have an extensive land base, solid infrastructure and a low cost structure, with operating costs targeted at less than $0.50 per thousand cubic feet. This positions us to generate sizable, reliable and profitable gas growth. As an added bonus, there are shallower zones that we have yet to exploit that can only add to the value of Greater Sierra.”

EnCana is forecasting natural gas sales of between 2,675 million and 2,745 million cubic feet per day in 2002, a 14 percent increase in average daily gas sales compared to the 2001 combined results for Alberta Energy Company Ltd. and PanCanadian Energy Corporation.

EnCana is the largest North American based independent oil and gas company, with an enterprise value of approximately C$30 billion. It is North America's largest independent natural gas producer and gas storage operator. Ninety percent of the company's assets are in four key North American growth platforms: Western Canada, offshore Canada's East Coast, the U.S. Rocky Mountains and the Gulf of Mexico. EnCana is the largest producer and landholder in Western Canada and is a key player in Canada's emerging offshore East Coast basins. In the U.S., EnCana is one of the largest gas explorers and producers in the Rocky Mountain states and has a strong position in the deepwater Gulf of Mexico. The company has two key high-potential international growth platforms: Ecuador, where EnCana is the largest private sector oil producer, and the U.K. central North Sea, where EnCana is the operator of a very large oil discovery. The company also conducts high upside potential new venture exploration in other parts of the world. EnCana is driven to be the industry's best-in-class benchmark in production cost, per-share growth and value creation for shareholders. EnCana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.

Advisory
This news release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements in this news release include, but are not limited to, statements with respect to: the estimated reserves of gas; the ability to recover the potential gas reserves; the potential life of gas reserves; the potential growth of production and reserves, including the doubling of gas production from Greater Sierra in the next three years and further growth beyond; the ability to grow production and reserves at attractive finding and development costs; the development of drilling and extraction techniques; the forecasting of natural gas sales in 2002; and potential exploration.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although EnCana believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this document include, but are not limited to: general economic, business and market conditions; volatility of oil, natural gas and liquids prices; fluctuations in currency and interest rates, product supply and demand; competition; risks inherent in foreign operations, including political and economic risk; imprecision of reserve estimates; the ability to replace or expand reserves; the ability to either generate sufficient cash flow to meet current and future obligations or to obtain external debt or equity financing; the ability to enter into or renew leases; the timing and costs of pipeline and gas storage facility construction and expansion; the ability to make capital investments and the amounts thereof; imprecision in estimating future production capacity, and the timing, costs and levels of production and drilling; the results of exploration, development and drilling; the ability to secure adequate product transportation; changes in regulations; uncertainty in amounts and timing of royalty payments; imprecision in estimating product sales; and such other risks and uncertainties described from time to time in reports and filings with securities regulatory authorities by EnCana and its indirect wholly-owned subsidiary, Alberta Energy Company Ltd. Readers are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this news release are made as of the date of this news release, and EnCana does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

FOR FURTHER INFORMATION:
Investor Contact:
Sheila McIntosh
Senior Vice-President, Investor Relations
(403) 290-2194
investor.relations@EnCana.com

Greg Kist
(403) 266-8495

Media Contact:
Alan Boras
(403) 266-8300

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As of 2017-12-15 16:03. Minimum 15 minute delay