Canary Resources Inc - Projects

Forest City Basin

The Forest City basin is a shallow structural depression in northeastern Kansas, southwestern Iowa, northwestern Missouri, and southeastern Nebraska. It is separated from the Cherokee basin by the Bourbon arch and from the Illinois basin by the Mississippi River arch. The Nemaha uplift marks the western limit in the subsurface. Gas-bearing shales and coals occur in deltaic and fluvial strata of the Cherokee and Marmaton Groups (Middle Pennsylvanian).

Forest City Basin in Northeastern Kansas. Source: Kansas Geological Survey

While the Cherokee Basin, mined for coal since the 1800s, is now an established coalbed methane producer, Forest City is an emerging CBM play. Exploration activity has intensified recently in Forest City. So far, however, commercial production in the Basin is limited to Miami County. Because individual characteristics of CBM basins vary enormously, knowledge of where to locate and how to complete and produce the wells is critical.

Source: Kansas Geological Survey

The initial focus of Canary Resources is Miami, Johnson and Linn Counties in Kansas and, across the state line, Cass and Bates Counties in Missouri.

Canary Resources - Area of Focus

Why is the Forest City Basin attractive to Canary Resources?

1. Canary's land position in the shallower part of the Forest City Basin. Advantages are lower drilling costs (less than half) and lower operating costs, compared with deeper thermogenic gas near the center of the basin where most of the newcomers have focused. In addition, Canary's shallower acreage contains both biogenic gas (which is usually dry), as well as wetter thermogenic gas.





Mississippian Structure (directly underlying Pennsylvanian coal-bearing strata.)




2. Shallow wells (less than 1,000 feet) require relatively small drilling rigs and completion equipment, which are readily available.




Typical drill site activity in Forest City Basin.




3. Producing wells in the Forest City Basin generally have early gas production, and steady flow rates with slow decline curves, indicating long production life.



4. Environmental issues are minimal. Production water is saline, so is required to be re-injected into the ground.



5. Almost all land in the basin is privately held by individuals and not subject to Federal oversight.



6. Property owners generally welcome development. Production facilities are compact and unobtrusive, and the royalty structure is typically 12.5%.




Typical producing well in Forest City Basin.





Typical meterset in Forest City Basin.




7. Commercial production near Canary's acreage proves the economic viability of shallow wells.
   
   
8. The Forest City Basin, close to large centers of population, is crisscrossed by a network of major gas lines with available capacity. The sweet gas can go straight into the pipeline. Transportation costs are attractive relative to those for larger, remote CBM plays.




Source: Kansas Geological Survey




9. Gas prices for Forest City CBM are at a slight premium to posted natural gas prices.

Canary Resources believes that these are 9 solid reasons to be excited about its position in the Eastern Forest City Basin. Development of Forest City is in its infancy, presenting an opportunity for those with the knowledge to exploit the Basin's prolific CBM resources.

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