Barnett Shale

Barnett Shale is a gas-bearing formation that the industry has known about for a long, long time. It was not commercially producible on a vertical well bore because the formation would not give up enough gas on a vertical structure in order to be able to make your money back out of what it took you to drill that well. Barnett Shale is deeply fractured, with fissures that tended to be sealed by calcium carbonate. The field went undiscovered until Mitchell Energy experimented with employing large gel fracture methods to open the wells to natural gas. Barnett Shale is a massive natural gas deposit that occurs naturally deep under approximately seven counties in North Central Texas and including northeast Tarrant County. The Barnett field stretches from Dallas west approximately 5,000 square miles and produces about 1.2 billion cubic feet of natural gas a day according to some industry reports.

GAMLS is one such software program, which allows geologists, geophysicists, engineers, and petro-physicists to evaluate old fields, look for step-outs, and to analyze the potential of new producing zones. In many cases, the new zones have been overlooked because technologies to determine the zone’s potential, and then to successful drill and complete the hydrocarbon-bearing formation did not exist. Gas shale well productivity varies widely by basin, due to variations in the natural fracturing, richness of the shale, net thickness, and initial rates. The major change has been in well completion and operating methods, which have led to increase per well reserves. Gas saturation seems constant across the region, so it is tempting to invoke increased natural fracturing in these areas as the explanation.

Gas companies are meeting with neighborhood associations to better explain the complexities of drilling in an urban setting. Residents are telling the companies what they think.

Natural gas pipes wend their way through the community. New pipeline rights of way and wells are everywhere. Natural gas pipes wend their way through the community. New pipeline rights of way and wells are everywhere. Natural gas produced on location is used to fire the distilling units that in turn boil the returned fracture fluid and produce fresh distilled water. The distilled water can then be used to fracture treat another Barnett Shale well.

Natural gas pipes wend their way through the community. New pipeline rights of way and wells are everywhere.

Approximately 130 rigs are currently estimated to be working to develop Barnett Shale acreage in the region. According to the United States Geological Survey, “the Barnett Shale play has total resource potential of approximately 26 trillion cubic feet of natural gas.”. Approximately 3,500 gross acres are subject to a Participation Agreement with Devon Energy Corporation in which we have the right to participate with a 36% working interest in each well proposed to be drilled on the contract area. The agreement is on a “drill-to-earn” basis, which means that Devon can earn a 50% working interest and a 40% net revenue interest in a particular lease by drilling and paying its proportionate share of the costs of a well on lands covered by the lease.

Production from the play now exceeds 1.2 billion cubic feet (Bcf) a day. An estimated 1.5 trillion cubic feet (Tcf) of gas has been commercially produced from the Barnett Shale. Production from the Moore #2 in Ellis County is nearly identical to the Moore #1 well (approximately 1.5 Mmcfe per day) but was drilled in significantly less time. A third well is planned using a different completion technique in an attempt to improve well economics. Production has been firmly established with over 4,700 successfully completed wells drilled, the field encompassing over 500,000 acres. It is currently producing in excess of one billion cubic feet per day.

Drilling likely will shift from the standard vertical wells to more expensive horizontal wells, requiring more manpower, equipment, expertise and time. Predictions are it will take another year or so before knowing if it’s a viable commercial opportunity. Drilling rigs are already located on the Dallas/Fort Worth airport, and inside the Fort Worth city limits, and are headed toward downtown. Drilling through the shale is like drilling through a Brunswick pool table or bowling ball. Yet we find several interesting factors in the shale itself such as micro fractures that travel from the north east to the southwest.

Estimates of the size of Barnett Shale’s reserves are rapidly increasing as the productive limits have not been defined. The effect of the Barnett Shale is starting to make a big impact on the nation’s gas business at a time of declining domestic production and projections of rising demand. Estimates promise 100,000 jobs and $10 billion in output per year. Businesses, schools, the arts, city parks, streets, hospitals, police and fire departments will all see improvements that stretch over decades.

Fractures offer such a pathway. Some years ago, there was a lot of hype about another Texas play, the Austin Chalk which is a carbonate reservoir rock that has an extensive network of natural fractures . Fracture system porosity is low, but where there are fracture clusters (and they are common), permeability may be locally high. Sealed natural fractures reactivate during hydraulic fracturing.

Surface tiltmapping provides direct measurement of fracture orientation(s) while dimensions are measured by tiltmeters placed in offset wells or in the frac well itself. Microseismic mapping has been utilized for more than 20 years to measure the location of micro-earthquakes or microseisms, which result from hydraulic fracturing. Surface rights are the rights for use of the surface of the land for residential, agricultural, recreational, commercial or other purposes. Mineral rights are the�right of ownership of the mineral resources below the surface.

Mineral rights can be sold as a percentage of the whole, or in their entirety. Mineral sales appeal to individuals that are interested in receiving value now for production that may (or may not) occur in the future. Mineral rights could belong to the current (surface rights) owner. Or, the mineral rights could have been “retained” by the original owner of the property from perhaps a hundred years ago and passed to heirs. Mineralogies indicated below were determined by EDS. Red arrows indicate small Ca-plagioclase crystals of angular shape.

Due to a mechanical casing failure, we could not complete the well in the 13,000 foot interval. The well was therefore completed in the 9,300 foot sand and is presently producing approximately 130 Mcfe per day. Due to these estimations and our research, we will continue to focus our efforts to continue developing an acreage position through on-going drilling programs which can provide proven reserves in excess of 200 BCF. Due to its thickness, the Barnett Shale can produce multiple pay zones within one well with various potential pay zones being accessed at a relatively minor cost. The Barnett Shale can be divided into an upper and lower unit, separated by the Forestburg Limestone.

Oil and Gas Journal reports that, ?shale and other unconventional gas plays were claiming large shares of the drilling in Texas and numerous other states.? Oil has also been found in lesser quantities, but sufficient (with recent high oil prices) to be commercially viable. Oil has also been found in smaller but commercially viable quantities.

Right now, the shale is producing nearly two billion cubic feet every day?enough natural gas to meet the needs of 9.2 million homes. And when it comes to machines and engines doing the work, customers are overwhelmingly choosing Cat. Right now we are primarily working in the North Texas gas field known as the Barnett Shale . We represent farmers and mineral estate owners that wish to offer oil and gas lease opportunities to established oil and gas operators.

Chesapeake is utilizing four rigs to further develop the 60,000 net acre leasehold in the Colony Granite Wash play. It anticipates the drilling of approximately 250 additional net horizontal wells over time. Chesapeake is currently utilizing four rigs to drill Haynesville Shale wells and plans to increase its drilling activity level to approximately 10 rigs by year-end 2008 and potentially more in 2009. The company currently owns or has commitments for more than 200,000 net acres of leasehold in the Haynesville Shale and has a leasehold acquisition effort underway with the goal of owning up to 500,000 net acres in the play.

Devon Energy, the largest natural gas producer in the Barnett Shale and also in Texas, said Wednesday it is drilling its 1,000th horizontal well in the Barnett Shale. The well, near Boyd, is expected to cost between $2.5 million and $3.3 million, the company said. Devon Energy has experienced a success rate at �close to one hundred percent,� comments Mr. Scott Coddy of Devon; he also estimates that approximately 85% of all gas in the Barnett Shale is still in place. Devon is the big dog in the Barnett Shale with 120,000 acres, the majority in the core area of the Barnett Shale. Last year, Devon drilled 325 vertical wells and 54 horizontal wells in the core area of the Barnett Shale.

Prices then usually bottom out in summer as oil prices peak. I wouldn’t be surprised to see natural gas over $9 per Mcf this winter. Prices are going through the roof. The way industry sees this play is that ultimately we will recover between 52 TCF to 100+ TCF (I think that they are way optimistic on this.) It makes it one of the largest gas discoveries in North America.
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