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“We’re on the leading edge of developing it as an oil play,” Encana spokesman Doug Hock said Tuesday of the San Juan. “This is new, different. There is a resource there and we’re looking to see if we can create something. And based on our announcement today, we think we can go forward with commercial potential.”

Tuesday, as part of the company’s first quarter results announcement, Encana Corp. (NYSE: ECA), based in Calgary, Alberta, Canada, said its San Juan acreage is commercial, meaning the company believes it can profitably drill and produce in New Mexico San Juan Basin.

Encana, like many energy companies across the country, has stepped up its search for oil due to the comparatively low level of natural gas commodity prices.

On the Colorado side of the border, the San Juan Basin is well known for its ability to produce natural gas from underground coal seams.

In New Mexico, Encana has partnered with local companies that have worked in the area for years, Hock said. The partnerships have drilled several wells horizontal wells into the Mancos shale formation.

Encana spent about $100 million in the basin in 2012 and expects to spend about the same amount in 2013, Hock said.

Encana has 160,000 net acres of mineral rights in the basin and running two drilling rigs — with a third drilling rig expected to be moved into the area by the end of the year, the company said.

The last five wells Encana drilled in the San Juan area had initial, 30-day production rates of oil, gas and natural gas liquids (NGLs) ranging from the equivalent of 150 barrels of oil per day to 700 barrels of oil per day.

About 80 percent of the total production was oil, the company said. Wells have cost between $5 million and $6 million to drill.

Encana’s Jeff Wojahn, executive vice president and president of the U.S. division, said during a conference call with analysts that each well in the San Juan area may produce between 200,000 barrels and 700,000 barrels of oil over its lifetime.

Encana drilled 13 San Juan Basin wells in 2012, and the company plans to continue drilling about one well per month, Doug Hock, an Encana spokesman, told the Daily News.

Encana said the last five wells completed have initial 30-day production rates of 150 to 700 barrels of oil equivalent per day, producing 80 percent oil, according to the Daily News.

Encana expects to spend about $100 million in the basin in 2013, about the same as last year.

Preliminary results from some of the 22 exploratory wells drilled in the Mancos shale formation in the San Juan Basin show commercial potential for production, according to industry executives who visited Farmington this week.

Ken McQueen of Oklahoma-based WPX Energy Inc. told the Albuquerque Journal (http://bit.ly/Yv3MkJ ) that two wells the company drilled in 2010 in a dry natural gas section of the Mancos have produced 2 billion cubic feet of gas so far. He described the area as an "attractive target" to pursue.

"These two wells are in the top 10 best wells drilled by WPX to date," he said. "They're quite extraordinary for us."

Energy development companies were hopeful about the prospects for liquid natural gas and oil in other sections of the Mancos formation. Sign Up for the Daily E-dition newsletter!

Mancos shale is sandwiched between soft sandstone layers in the San Juan Basin that producers have been exploiting for decades. Modern drilling techniques allow resources trapped inside the rock-hard shale to be tapped. Three dimensional imaging helps pinpoint oil and gas deposits, while hydraulic fracturing and horizontal drilling can access the deposits.

"I'm bullish on the Mancos," said T. Greg Merrion, president of Merrion Oil and Gas Corp. in Farmington. His company is partnering with Denver-based Bill Barrett Corp. to drill exploratory oil wells in the area.

"We've already seen a number of wells drilled that are economic," Merrion said.

Companies must learn a lot more about the shale formation before any gushers explode, but some of the 22 exploratory wells drilled to date have shown solid commercial potential for oil and gas production, according to industry executives who attended a conference this week in Farmington to discuss production potential in the Mancos play, a previously untapped section of the San Juan Basin....FOR THE RECORD: This story should have said two wells drilled by WPX Energy Inc. have each produced 2 million cubic feet of natural gas and are expected ultimately to produce between 5 million and 6 million cubic feet each.

WPX or Williams, XTO (Exxon), Encana, Bill Barrett + Merrion and now Scott in Colorado

The conference, which drew about 500 attendees from across the nation to San Juan College, was the first to have a dedicated focus on the Mancos Shale, which stretches across the northwestern part of New Mexico and into southwestern Colorado.

After years of declining production in the San Juan Basin, companies are eyeing the shale play for both natural-gas and oil potential because of advances in hydraulic fracturing and horizontal drilling technologies that have helped operators unlock shale gas and oil across the nation.

“It’s reasonable that the Mancos Shale could be a really, really good shale play in the San Juan Basin,” said Darryl Williams, the vice president of subsurface for BP North America Gas Exploration and Production Co.

Other presenters were more direct.

“I’m bullish on the Mancos, we’ve already seen a number of wells drilled that are economic,” said T. Greg Merrion, president of Merrion Oil and Gas. “I’m looking forward to this next boom.”

With natural-gas prices hanging around $4 per thousand cubic feet, many conference speakers focused on the oil-producing window of the shale play located in the southern San Juan Basin.

The play has been estimated to contain up to 60 billion barrels of oil, about 10 percent of which is expected to be recoverable, according to estimates by Encana and Daniel Fine, a senior energy analyst with the New Mexico Center for Energy Policy.

The possibility of a resurgence had some speakers proclaiming the beginning of a new era of economic prosperity for northwest New Mexico.

“These are happy times again,” former U.S. Senator Pete Domenici said.

The San Juan Basin Energy Conference, (www.sanjuanbasinenergy.org) happening in Farmington, NM on March 18 and 19 is already sold out, with operators traveling to northwest New Mexico from all over the country and beyond. According to the website, this conference will bring together parties interested in Mancos Shale development, considered the next significant oil and gas shale play in that region. Developing this play is heralded as a renaissance for this region after nearly a century of petroleum geology and activity.

Interest in this conference has come from as far away as Bulgaria. Last June, Bulgarian Parliament eased its ban on hydraulic fracturing, to take advantage of its natural gas reserves and lessen the country’s dependency on Russian resources.

“It’s a real opportunity to bring everyone together,” Randy Pacheco, dean of the San Juan College School of Energy (http://www.sanjuancollege.edu/energy) said on The Scott Michlin Morning Show, at KSJE.com in Farmington, NM. Hear the entire program here: http://www.publicbroadcasting.net/ksje/.jukebox?action=viewMedia&mediaId=1024511.

Full disclosure: program host Michlin is a native New Yorker who has lived in New Mexico for 22 years. He sees the economic impact a robust energy industry has in a community. He teaches at San Juan College, where the School of Energy is a national leader in educating tomorrow’s energy professionals. He also lived in New York’s struggling Southern Tier for several years and knows the region needs an economic boost.

The focus of this conference will be the game-changing activity of the Mancos Shale play, anticipated to be rich with oil reserves. This area of New Mexico has traditionally been the place for natural gas development. Hydraulic fracturing, however, is opening the door to oil production here, which was previously limited to southeast New Mexico. “It’s going to be important for oil production. It’s a new venture and it’s welcomed here,” said Dean Pacheco.

Dean Pacheco spoke words that would endear New Yorkers in the Southern Tier, if only they were spoken here. “It’s a very interesting time here in the San Juan Basin because we’re starting to see an evolution of energy. Not only have we produced trillions of cubic feet of natural gas and millions of gallons of oil and terawatts of electricity. As you start to see natural gas and how we use natural gas, the San Juan Basin will continue to be a major player in energy production in the US. We need to come together as a community – education, government and business – to insure that we can position this for our local residents.”

The conference is scheduled to be held March 18-19 at San Juan College.

The Farmington Daily Times (http://bit.ly/WJ1E3Q ) reports that local officials hope the Mancos Shale, a geologic layer of the San Juan Basin, will be the next big play in oil shale.

Companies are exploring the Mancos Shale, and the Times reports that its potential for production is unclear.

The basin's emphasis has been on natural gas production.

"This is the Renaissance of the San Juan Basin," said conference organizer Dr. Daniel Fine , senior energy analyst with the New Mexico Center for Energy Policy. "We are seeing a revolution on the part of American technology in natural gas and shale oil recovery in shale formations." The conference is titled, "San Juan Basin Energy Conference." The 2013 theme is "Recognition of the Mancos Shale as the next chapter in the American revolution of unconventional natural gas and oil technology leading to national energy independence in 2020." BP America, Chevron, Continental Resources, Encana, PNM and the U.S. Department of Energy are expected to make presentations at the conference.