Barnett Shale Oil
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 may be further categorized as in-situ generated-reservoired or as migrated gas. Fundamental geochemical characteristics of the petroleum system and type of gas must be determined to map favorable production fairways (sweet spots). Gamers are multi-taskers and independent thinkers; boomers are linear. This is a gross generalization, but numerous books and articles have been published, so people are tending to perceive and believe that there is a difference.
EOG also announced a similar oil discovery in Colorado and a big natural gas play in Canada. EOG’s proved reserves in the play at December 31, 2007 were 1.4 Tcfe.
Operators are paying up to $26,000 per acre for a 3 year lease with 25% royalties. This was just the beginning. Operators are exploring for gas in Hill County, which has had no commercial production for years. Westside and Forest Oil are now the drilling the horizontal section of a third well, the Primula 2H.
Production during the second quarter of 2004 was estimated to be 1.99 Bcfe, or 18 percent above the 1.68 Bcfe of production in the second quarter of 2003. Second quarter 2004 production was up seven percent from the previous quarter. Production from the acquired properties is expected to offset production lost through these property sales. Production from the acquired properties is expected to offset production lost through these property sales.
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. Production in the Barnett Shale is affected by several factors, only some of which may be measured or calculated using log data, making gas content a poor predictor of well performance. However, a neural network technique has been developed to successfully estimate reservoir potential that relies on log derived qualitative and quantitative parameters.
Chesapeake, with revenues in the billions last year, plans to spend $100 million and will devote three rigs full time to drill 45 to 50 wells around Johnson County in 2005. In addition to expansion, Chesapeake hopes to increase the existing wells’ daily production of 25 million cubic feet to 86 million cubic feet by 2006. Chesapeake’s Dallas/Fort Worth Airport lease has helped push the boundaries of exploration to the eastern fringes of the basin, while demonstrating that unexplored acreage still exists. In late October, Chesapeake announced that it had recently initiated daily production of about 30 million cubic feet (MMcf) of gas equivalent from the first 11 wells on its 18,000-acre Dallas/Fort Worth International Airport lease that straddles the Tarrant and Dallas county line.
Price-sensitive projects are typically considered lower risk-lower return and are feasible only as long as the price for product remains above a certain level. 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.
Drilling companies do not always exclusively own the land they seek to drill on. In many agreements, the companies own the mineral rights while another party owns the other rights to the property itself. 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.
Horizontal Drilling is the science of drilling non-vertical wells. Directional drillers are given a well path to follow that is predetermined by engineers and geologists before the drilling starts. Horizontal drilling has changed the way oil and gas drilling is done by allowing producers to drill horizontally beneath neighborhoods, schools and airports. Since much of the gas in the Barnett Shale is lodged beneath the City of Fort Worth, this new drilling technology has created a boom for the city. Horizontal drilling also has less impact on the environment. With horizontal drilling, it’s possible to extract gas from property adjacent to the well.
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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. Fracturing or artificial stimulation is necessary to produce the Barnett; special programs have been developed specifically to enhance production in this reservoir. Remote sensing studies completed by the author have identified four tectonic pulses that have created natural fracturing (Table 2).
Devon is also moving outside the core area to develop wells in Johnson and Parker Counties. It employs around 800 contractors for its work in the area. Devon has 7,500 risked Barnett shale locations in inventory, which would last 13 years at its current activity level.