WASHINGTON, DC, Aug. 31
By Nick Snow
OGJ Washington Editor
Oil and natural gas producers have begun work on developing a third shale play in Louisiana, giving the state one proved and producing formation and two that are being watched closely, according to Scott Angelle, secretary of Louisiana’s Department of Natural Resources.
The new area in northern Louisiana and southern Arkansas is referred to as the “Brown Dense” or “Lower Smackover” and is believed to be a limestone layer at the base of the Smackover formation, a long-time source of traditionally producer oil and gas in northern Louisiana, Angelle said Aug. 31.
He said the Brown Dense joins the Tuscaloosa Marine shale as the second half of a Louisiana dense-rock play duo believed to have production potential similar to Louisiana’s Haynesville shale and the Barnett and Eagle Ford shales in Texas. The Tuscaloosa Marine shale is believed to underlie much of central Louisiana, with exploration under way in areas from Vernon Parish to East Feliciana Parish, Angelle said.
He said initial development of the Brown Dense—generally believed to underlie northern Claiborne, Union, and Morehouse parishes—has barely begun. Southwestern Energy Co., Houston, has begun to drill its first well in the Brown Dense in Arkansas, and has announced it will seek a permit to drill a second in Claiborne Paris by yearend 2011, Angelle said (OGJ Online, July 29, 2011).
In Southwestern’s second-quarter earnings teleconference on July 29, the company’s Pres. and Chief Exeuctive officer Steve Mueller said the company had, to date, invested $150 million, or $326/acre, on undeveloped Brown Dense acreage, with an 82% average net revenue interest. “We’ll begin by targeting the higher gravity oil window under our lease, which we believe could be 45-55° gravity range,” he said.
The right mix
Southwestern has reviewed the Brown Dense extensively across the region and has indications that it has the right mix of reservoir depth, thickness, porosity, matrix permeability, ceiling formations, thermal maturity, and oil characteristics, Mueller stated.
The area’s porosity is 3-10% and it has an anticipated 0.62 psi pressure gradient, making it overpressured, he said.
“We have assembled log data on 1,145 wells covering five states to evaluate the Brown Dense and acquired over 6,000 miles of 2D seismic and have gathered and analyzed rock data from cores and cuttings from 70 wells that penetrated the Brown Dense zone,” Mueller said. “At this point, we currently have more data about the Brown Dense than we had on the Fayetteville shale when it was announced.”
He said Southwestern hopes to spud its first Brown shale well in Arkansas during the third quarter and the second, in Louisiana’s Claiborne Parish with a planned vertical depth around 8,900 ft and a 3,500 ft planned horizontal lateral, later this year.
“We plan to drill up to 10 wells in 2012 as we continue to test this concept,” said Mueller. “This formation has sourced several large conventional oil and gas fields and our hope is to use horizontal drilling technology to unlock at least as much potential. Positive test results could significantly increase our activity in this play over the next several years.”
Angelle said Devon Energy Corp., Oklahoma City, also has acquired 40,000 acres in the Brown Dense and plans to drill a test well there. The independent has received a permit for a well targeting the deeper Smackover in Morehouse Parish, the Louisiana official said.
He said that Devon also is active in the Tuscaloosa Marine shale, with 250,000 acres leased, and plans to drill two wells. About a half dozen wells targeting the Tuscaloosa Marine—long thought to contain substantial reserves, but previously considered uneconomical—are currently in the process of being drilled or securing permits, Angelle said.
The increased activity will create more water demand for hydraulic fracturing, noted another Louisiana official, State Conservation Commissioner Jim Welsh. The decline in water use in the Haynesville shale play, however, may more than offset the increase in water use in the Tuscaloosa Marine and Brown Dense, at least in their early stages.
Producers drilling in the Brown Dense formation have informed the state’s conservation office that they intend to use surface and recycled water for their overall project needs, in conformance with guidelines issued for nearby areas experiencing stressed groundwater conditions, he said.
The anticipated Brown Dense development area underlies the Sparta Aquifer, where water levels have recently improved following combined state and local efforts to manage groundwater use, Welsh said. “We are still discouraging new high-volume users from using groundwater in that area, and are giving guidance for alternative sources for water,” he added.
By TED GRIGGS Advocate business writer Published: May 6, 2011
A third independent, Amelia Resources LLC of The Woodlands, Texas, has signed a deal with an unnamed partner to help develop the more than 110,000 acres Amelia has under lease.
Devon Energy officials said Wednesday the Oklahoma City-based company has leased around 250,000 acres in the shale. Devon plans to drill two wells in the formation this year, the first of them this quarter.
On Thursday, Dallas-based Denbury Resources announced a joint venture with an unnamed partner that will complete one well and drill another at no cost to Denbury. In late 2009, Denbury acquired Encore Acquisition Co., which had drilled some wells in the shale.
In a news release, Denbury Chief Executive Officer Phil Rykhoek said the company will retain a small interest in future activities in the shale.
“We continue on our oil-focused program and expect many good things in the near future,” he said.
LSU researchers have estimated the Tuscaloosa Marine Shale holds 7 billion barrels of oil.
During Wednesday’s conference call with stock analysts and investors, Devon Executive Vice President of Exploration and Production David Hager said the formation lies 11,000 to 14,000 feet underground and is 200 feet to 400 feet thick.
Hager said Devon believes it can use fracturing technology — pumping in water, sand and chemicals to crack the shale — to increase production in the formation.
The state plans to hold a hearing, possibly by next month, on whether to approve Devon’s request to use hydraulic fracturing for a well near Ethel in East Feliciana Parish. “Fracking” has drawn criticism from environmentalists who say the process contaminates the water supply and places a heavy burden on the resource. The oil and gas industry says those claims are inaccurate.
Hager said vertical wells drilled in the formation had initial production rates of 300 barrels per day.
The three or four horizontal wells drilled in the shale three years ago, which were shorter than Devon plans to drill, tested at rates of up to 500 barrels per day, Hager said.
Those are all reasons for encouragement, Hager said. But Devon needs to get more information on the oil play, including whether the formation can be fractured, and there are risks associated with Devon’s investment.
Still, the company has spent less than $50 million on its leases, and if Devon is successful the company “can create an awful lot of value,” he said.
Kirk Barrel, president of Amelia Resources, said drilling a longer horizontal segment, or lateral, exposes the wellbore to as much rock as possible, and that means the well can produce more oil.
Barrel, author of a blog on the Tuscaloosa Marine Shale, said one of Encore’s wells was drilled horizontally out to 4,100 feet; a typical horizontal section is 4,000 to 5,000 feet long.
However, in the two wells it fractured, Encore only did three stages, Barrel said. Devon’s plans show the company plans to do 13- to 15-stage fracks, which in theory should substantially increase production.
In the south Texas Eagle Ford Shale, “a distant cousin” geologically of the Tuscaloosa Marine Shale, some drilling companies have done 20-stage fracks, Barrel said. In North Dakota’s Baaken Shale, some wells have had 40-stage fracks.
Matt Ross, a spokesman for the Louisiana Oil and Gas Association, said in multistage fracturing, the initial fracturing is done around the point where a well levels out horizontally.
The subsequent fracks are spaced throughout the rest of the horizontal section, Ross said. The spacing depends on the drilling company’s preference.
Meanwhile, Barrel said his firm has placed a significant amount of acreage with an unnamed partner.
Barrel said he could not disclose how much acreage Amelia now has under lease; in February that was more than 110,000 acres.
Amelia is still in the process of adding to its acreage, Barrel said, and he did not know when the partnership might begin drilling.
- Emerging Shale Oil Plays (mb50.wordpress.com)
- Louisiana official reports activity on third possible shale play (mb50.wordpress.com)
- New Frontiers: the attention turns to some up-and-coming plays (mb50.wordpress.com)
- Halliburton: Moving Quickly on the Global Shale Boom (mb50.wordpress.com)
- Natural gas shale play development now going global (mb50.wordpress.com)
- US Shales: Whether its a Revolution of Evolution, Shale Gas Delivers (mb50.wordpress.com)