Oil & Gas News | Tuscaloosa Marine Shale
GHS' Morrison: Commerciality Of Tuscaloosa Shale May Be Known In 2012
The Louisiana Eagle Ford shale. The Tuscaloosa Marine shale. The Tuscaloosa Marine sand. "The terminology is going to evolve as you guys figure out what you’re going to call it, when you start spending money on it," says Dan Morrison, managing director and senior research analyst for Global Hunter Securities LLC.
"I think whoever spends the most money first gets to name it."
Morrison addressed members of ADAM-Houston, an organization of E&P M&A professionals, Friday.
The hot new horizontal and multi-stage fracturing oil play spans central Louisiana and Mississippi. Unconventional-resource behemoth Devon Energy Corp. has leased some 250,000 acres over the shale and sand. Its first horizontal test, Lane 64 in East Feliciana Parish, Louisiana, was spud in mid-May and reached vertical depth of 15,040 feet in early June. It is to have a 5,280-foot lateral and undergo 15 frac stages.
Its second test, Beech Grove Land Co. 68 H, also in East Feliciana Parish, may go to 13,750 feet and have a roughly 5,000-foot lateral. It was permitted earlier this month. Generally, South Texas' Eagle Ford play becomes the Woodbine nearer to the Texas/Louisiana border and then is interrupted by the Sabine Uplift. The Eagle Ford resumes in Louisiana and, approaching the ancient Mississippi River delta more than 100 miles north of the Gulf Coast, the Tuscaloosa Marine shale and sand come into play at some 11,000 to 14,000 feet.
"The farther away you are from the (river), you may have more of a Texas Eagle Ford type of play; as you move closer, you get a mix of lithologies. The principal difference is the presence of calcites in the formation. That's been what has really made the Eagle Ford work in Texas; it's as much as 70% calcite or higher in some cores. That makes the rock much easier to frac…
"As you get closer to the (river) delta system, you get more into clay and the lithology gets a little more challenging from a fracing perspective." The clay can collapse into the fractures, preventing oil flow.
The Tuscaloosa has been looked at since at least 1962 by Chevron Corp., Callon Petroleum Co., Sun Oil Co., Exxon and other producers, but it never made gushers by early oilfield standards. Efforts quit after 1982 when oil prices collapsed but resumed in the late 1990s, again without company-maker-type results.
For example, drilled in 2000, PetroQuest Energy Inc.'s Lambert H-1 in Amite County, Mississippi, had initial production (IP) of 54 barrels of oil and made 11,600 barrels during the next five years. "PetroQuest found oil not at commercial rates, but that was with technology 11 years before what we have today. It wasn’t drilled horizontally or put to fracture stimulation," Morrison says.
Encore Acquisition Co., which is now part of Denbury Resources Inc. and was a leader in the Bakken horizontal oil play in North Dakota, drilled a few horizontals into Tuscaloosa a few years ago. One IP'ed 323 barrels of oil with a 4,100-foot lateral and three frac stages. "If you scale up those results from three stages to 20-plus stages, the (potential) results are pretty intriguing," Morrison says.
At a cost of $10- to $12 million per well, he and his research colleagues estimate Tuscaloosa wells need to IP between 750 and 1,000 barrels of oil to be economic, he adds.
Louisiana State University's Basin Research Institute estimated in 1997 that the Tuscaloosa holds 7 billion barrels of oil in the bottom 50 feet of the formation over some 3.8 million acres.
Besides Devon, at work on figuring out the play and capturing the oil prize is Denbury, which holds some 100,000 acres over Tuscaloosa as a result of the Encore acquisition. That acreage is in a joint venture with Encana Corp., which has re-entered one of the old Encore attempts, Board of Education 1H in Amite County, Mississippi, and has commenced a 10-stage frac on it. Morrison says the company is having trouble with it so far, though.
Meanwhile, privately held Indigo II Louisiana Operating LLC's Bentley Lumber 23H #1 is to go to 10,600 feet in Rapides Parish, Louisiana, in the western window of the play. It will have a 4,000-foot lateral and undergo 15 frac stages. An Indigo vertical test, Bentley Lumber 32#1, eight miles away in Vernon Parish, was drilled to 12,020 feet earlier this year. Indigo has some 240,000 net acres over the Louisiana Eagle Ford and Tuscaloosa.
Also in the play are EOG Resources Inc.; Newfield Exploration Co.; South Texas Eagle Ford producer Goodrich Petroleum Corp., which announced earlier this month that is has leased some 74,000 on the Louisiana side; and privately held Amelia Resources LLC, which holds 110,000 net acres.
Morrison estimates the commerciality of the Tuscaloosa play will be known sometime next year. "The companies that are in there as leaders in the play," such as Devon, EOG, Newfield and Encana, "have (successfully) done this a time or two with other horizontal plays."
A great deal remains to be decoded, though. "The clay content changes…The completion recipes will have to be figured out over time…Early results might not be that impressive," Morrison says.
While shale is present, most of the play may consist of carbonates, which are more easily fractured, he adds. "It's always fascinating to me to see old (oil and gas) areas get reborn with the application of new technology. We see it in the Permian, in the Bakken…The one trend in horizontal technology that seems to be emerging is more of a focus on carbonates than on true shales."
For example, the Niobrara shale play is really a complex mix of carbonates as is the Texas Eagle Ford. The hot new Midcontinent horizontal oil play Mississippi Lime is a carbonate system. "And, if you look up into the Hugoton and into Kansas…, there are a lot of shallow carbonate fields that have been fairly marginal vertically that are all getting a fresh look these days.
"What's been a shale revolution is rapidly turning into a horizontal carbonate oil revolution. The Monterey (in southern California) is another that is anything but a shale…And you guys will be out finding them."