Chesapeake Gas Well Blow-out in Wyoming Leads to Evacuations (CHK, CEO, HAL)

About 70 people have been evacuated from an area within a 5-mile radius of a natural gas well about 10 miles northeast of Douglas, Wyoming, has been leaking mud and natural gas since late Tuesday afternoon. The well is being drilled by Chesapeake Energy Corp. (NYSE: CHK) in a shale gas formation known as the Niobrara, which extends south into Colorado and east into Nebraska. The leak was caused “while technicians were installing a new steel casing on the unit,” according to a report in the local paper, the Douglas Budget.

Chesapeake sold a one-third interest in its Niobrara leaseholds to Cnooc Ltd. (NYSE: CEO), the US arm of China Offshore Oil Co., for about $1.3 billion in January 2011.

According to the Budget, Chesapeake has sought assistance from the Boots & Coots division of Halliburton Co. (NYSE: HAL) in controlling the well.

The horizontal portion of the well had been drilled and the company was installing the well’s casing before the hydraulic fracturing process could begin. Last year Chesapeake had a blowout on a well in the Marcellus shale play in Pennsylvania that resulted in drilling and fracking fluids being spilled.

There is no estimate of the amount of gas leaking into the atmosphere, but there appears to be rather limited danger of explosion.

Paul Ausick