Replies to This Discussion

Permalink Reply by 1kw6x71km1v37 on January 29, 2014 at 7:22

Sorry, Joe, but I look west and primarily I see is a bunch of loser Austin Chalk wells that are so depleted they would be P&A'd if it were not for the huge acreage the wells are holding with miniscule production. As you stated earlier in this thread:

<When I went to that first pre-conference hearing that Anadarko held three years ago my concern was that they were locking up a lot of acreage with wells that could not possibly drain the area unitized. The land owners present at that meeting were happy though. They were of the opinion that at least someone was drilling. They did not seem to be aware that a little production could hold a great number of leases. And they did not seem to care. It was Drill Baby Drill>>>

p.s., It's my understanding Anadarko reserved the right to depths outside the AC when the company sold off the Masters Creek field to the first of three secondary operators. Since then, everything has been done to keep these marginal properties producing except to call in God to intervene. I should add here that had all the brine from these wells be hydrocarbons instead, the Austin Chalk would have been one of the best plays in North America. At times, the water cuts ran as high as 80%

Permalink Reply by Joe Aldridge on January 29, 2014 at 8:12

Thanks CS. 

I appreciate the feed back and your agreement with me. Wish the Commissioner held the same views. I think that would make a lot of difference in the way things are unitized and the ability of these companies to hold acreage with small amounts of production. I'm concerned about the same situation developing in the TMS. I guess time will tell.

Permalink Reply by 1kw6x71km1v37 on January 29, 2014 at 14:24

I have my doubts as to whether or not some of these AC wells can hold their acreage by their mediocre production. Doesn't production  have to be in "commercial quantities"? Some fee owners might do well to consider dumping their "operators" and negotiating new leases from scratch.

Permalink Reply by Rock Man on January 29, 2014 at 14:30

Agree with the theory in concept (i.e. uneconomic leases don't HBP acreage) but my experience over 30+ years in the industry is that this is a very difficult thing to prove by the landowner (plus very expensive once you get lawyers involved).

"Economic" can be a tough situation to verify - especially when operators can put very low monthly lease operating costs on a well  / unit and then say "Look, the production, albeit marginal - covered operating costs".

Best to have an outside operator who wants the acreage in question to be running the traps and leasing uneconomic units for their own benefit and fighting the "battle" (IMO).

Permalink Reply by Joe Aldridge on January 31, 2014 at 8:28

CS,

I don't think that is going to happen. My understanding is: Anytime you have oil produced that can be sold that is commercial production. I don't think there in actually any reference to economic production. So the operator can produce at a loss and still hold property if they are paying the royalty to the mineral owner. That is, unless the lease has a minimum level of production stated. I don't know of many or in reality any leases that contain language that address that.

Permalink Reply by Thomas C. McKowen, IV on January 31, 2014 at 10:26

Joe,         Louisiana law requires that production be in paying quantities to maintain a lease.  Generally this means that the current income to the lessee's share exceeds current expenses.  See article 124 of the Mineral Code.  Of course application of the rule is more complicated.  (And often would require a lawsuit.)  Tom

 

 

Permalink Reply by Nixon Dow on February 3, 2014 at 5:25

The case law regarding "paying quantities" and article 124 provides little clarity as to what the standard should be. I agree withThomas that a lawsuit would have to be pursued in order to get a release. Honestly the only real way to prevent this issue from occurring is stipulating what is to be considered "paying quantities"  in the lease itself.

 The one positive that the prospective lessor would have going for him is that the case law that determined that "paying quantities" can still occur when the lessee is actually losing money might not be applicable today. In those cases the reasoning why "financially uneconomical" well production was still deemed to be paying quantities was because the price of Oil was abnormally low at the time. However, now that oil is well above $75 a barrel, the justification for "uneconomical" production to hold a lease would is just not reasonable.

Basically the factor that caused production to become "uneconomical" would have to be something like low product price or a cost that could be eliminated reduced (i.e. having to truck saltwater because injection well is down). 

Permalink Reply by david crocket on February 18, 2014 at 4:07

Oil well production not at expectations

Details

Published: 18 February 2014

Prime Energy of Australia has issued an update on its three deep horizontal Austin Chalk wells located between Dupont and Simmesport.

 

The three wells in the report were on the Deshotels 20H and 13H Production and the Rosewood Plantation 21H No. 1 well. The wells are producing but not what the company was expecting. “An acid workover procedure has been carried out on the Rosewood Plantation 21H well in an attempt to break loose drilling fluids, solids, cuttings and other debris left in the well during drilling,” the report said. “Although, due to the mechanical damage incurred during completion, the well will never produce at targeted levels, it has responded positively to the workover and intermittent low level production has been achieved.” The company is proposing to install a lift system (pump unit) to optimize production by smoothing out the erratic well performance and delivering more consistent oil sales. Progress on the lift system installation and the resulting production rates will be announced at a later date. The average daily production rate for the wells during the December 2013 quarter was 88 Bbls a day. According to the report, production has remained fairly stable on the Deshotels 13 and 20H wells despite the mechanical issues which impeded their effective completion. The three production units hold approximately 3,360 acres by production plus 16,942 acres in undeveloped acreage. The acreage is located in Avoyelles Parish. The Turner Bayou project comprises approximately 80 square miles (50,000 acres) which have been imaged by a proprietary 3D seismic survey initially targeting development of the Austin Chalk horizon. In addition to the Austin Chalk potential of the Turner Bayou project area, exploration drilling within Pryme’s Turner Bayou leases has intersected the Tuscaloosa Marine Shale which is analogous to the Eagle Ford Shale in South Texas.

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Permalink Reply by John Matherne on April 2, 2014 at 6:05

I would like to identify producing Austin Chalk wells by serial number and which parish they are in.

Lacour 43 well 243247 Pointe Coupee

Others? please list so we can see how much oil has been produced in the Austin Chalk.

 

Permalink Reply by Joe Aldridge on April 2, 2014 at 7:08

John,

The ones I have  are in Avoyelles.

241623        Deshotels 20H

243093        Deshotels 13H

243229        Dominique 27

244014        Rabalis 25

244879        Rosewood 21H

The rest of the recent AC wells were drilled in Vernon Parish. APC is letting the permits expire that they have taken out. Two have expired and two will if no activity by Sept. Hope your research produces something.

Permalink Reply by John Matherne on April 2, 2014 at 7:17

Thanks Joe

That's what I am looking for. I want to track total BOE produced in the AC. My TMS is too deep as they say in PC so I am looking at the AC and can it be made economical to develop.

Permalink Reply by Joe Aldridge on April 2, 2014 at 7:27

John,

There are a number of articles that deal with the AC in Texas and some of the completion practices that they use. Do a Google and see what you find. Also the Permian is similar and look at the production they are getting out there. There are techniques that can be used to hold the formation open. For some unknown reason these protocols are not being used here.

I'll try to list a couple of Articles that I've found. I don't have them with me today. I think you will find them interesting. They are basically what I've been saying since they started drill in this area.

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