Replies to This Discussion

Permalink Reply by W Sharp on February 4, 2011 at 17:30

Does the OK co have holdings/wells in Avoyelles already?

• ▶ Reply

Permalink Reply by Joe Aldridge on February 5, 2011 at 2:09

Abington, Great info. That little operator out of OK may be CHK. They are supposedly selling assets and building a cash reserve to make a big move on an oil play. This may be it. At least that's what I've heard. Really, GOOD INFORMATION!!!!

Permalink Reply by The Shadow on February 4, 2011 at 19:55

What is the name and home office address of all the "Operators" and "Lease Agents" that are trying to lease in the parishes mentioned?

 

Also, since it has been stated above that the Austin Chalk could be the play of the century or the biggest in the last 50 years, then why are the bonuses and royalty so low, or at least much lower than the gas play, and this being an oil play?

• ▶ Reply

Permalink Reply by Joe Aldridge on February 5, 2011 at 1:59

Hi Shadow,

Good questions. First, most operators like to stay annoamous as long as possible when an area is opening.  Secondly, the lease agents have to do their court house work and determine if your property is in the "play" that they have been assigned and they have to research and know who actually owns the minerals before they approach you. The best advice is just be patient and they'll get around to you if you are in their area. 

Now about the lease bonus. There has to be a starting point. Most people don't know that this may be the biggest thing that has happened onshore recently. And at the present time there isn't that much competition for leases. Companies have not made the commitment to develop what is a difficult formation to drill and produce. When there is a stampede to get the trend leased then we'll see the prices go up greatly. Personally, I would rather have a good operator that has experience in Chalk and knows how to drill and produce it than someone that's just paying big bonus bucks and doesn't. An operator that does not know what they are doing can do great damage to the formation and then all you would have is a dry hole or at best a mediocre well and nothing long term. The true income will be in the royalty if you get a good well with a good operator.

Permalink Reply by W Sharp on February 3, 2011 at 17:06

I have 160 acre of minerals near Eola, and also turned down 150 per acre and 1/5th  at the end of last year. Will see what happens.

• ▶ Reply

Permalink Reply by Abington on February 13, 2011 at 13:07

From this morning's Baton Rouge Morning Advocate newspaper:

Tuscaloosa shale activity

TUSCALOOSA SHALE ACTIVITY

Oil companies leasing land near EBR, central Louisiana

• By TED GRIGGS
• Advocate business writer
• Published: Feb 13, 2011 - Page: 1a

Comments (4)

A handful of companies are leasing hundreds of thousands of acres across portions of the Baton Rouge area and central Louisiana, home to a geological formation that LSU researchers say could produce 7 billion barrels of hard-to-get oil.

“If they’ve leased one acre, they’ve leased 500,000 acres, or more,” said Dan Collins, a landman who represents property owners of around 100,000 acres in an eight-parish area.

The leasing firms are locking up mineral rights — typically at $100 to $150 per acre — on property from Avoyelles Parish to Washington Parish, Collins said. The properties lie in the Tuscaloosa Marine Shale, a 5,900-square-mile area that stretches from Texas through the center of Louisiana into eastern Mississippi.

It’s difficult to know how much property is under contract because the leases haven’t been recorded for the most part, Collins said, and the leasing companies are still acquiring the rights to more land.

“They’ve probably got 50 landmen in the field,” Collins said.

Leslie Ligon, a Clinton attorney, said in the last four to five months, his office has processed 130 to 150 leases for landowners.

Ligon said the leasing companies wouldn’t tell him what formation is being targeted or the name of the company that is planning to drill.

However, West Monroe-based DJ Energy has opened a St. Francisville office, and crew leader Zane Daniels confirmed that the company is leasing in the Tuscaloosa Marine Shale.

Daniels said he could not disclose other details.

Kirk A. Barrel, president of Amelia Resources, an exploration and production company in The Woodlands, Texas, said his company is marketing 110,000 acres of leases in the shale.

“We’re talking to a lot of people right now. We’re talking to all the major shale players,” Barrel said.

Barrel said that Devon Energy Corp. is rumored to have leased at least 100,000 to 150,000 acres in the eastern portion of the play.

Devon Energy spokesman Chip Minty said the company does not comment on rumors or discuss its leasing activity.

The industry is taking another look at the Tuscaloosa Marine Shale for three reasons, Barrel said.

“One, no doubt, $90 oil has gotten the attention of the entire industry,” Barrel said. “The low (natural) gas prices have forced the industry to look more toward oil.”

The other crucial factor is the success of the Eagle Ford Shale in south Texas, a formation of similar geologic age to the Tuscaloosa, he said.

Key to the activity there and in other shale formations around the nation is a horizontal drilling technique that uses an environmentally controversial process called hydraulic fracturing or fracking. Drillers force enormous amounts of water, sand and chemicals under high pressure into the formations to fracture the shale. The sand props the cracks open, releasing the oil.

People are asking themselves, if it’s working in the Eagle Ford, could it work in the Tuscaloosa?

Collins agreed.

Oil is king, he said. Some energy companies are trying to get rid of their natural gas reserves. Prices are so low that it’s harder to break even on gas wells in places such as northwest Louisiana’s Haynesville Shale, so many companies are shifting their portfolios to oil.

The Bakken Shale, an oil-bearing formation in North Dakota, is one of the hottest exploration areas in North America.

The Bakken contains an estimated 4.3 billion barrels of oil and is one of the reasons North Dakota’s unemployment rate is around 4 percent. In April, a New York Times story described it as a state with plenty of jobs but few places to live. Some oil companies have rented entire hotels while others had brought in portable housing units, the story said.

A 1997 report by LSU’s Basin Research Institute says the Tuscaloosa Marine Shale, which lies 10,000 feet to 17,000 feet or so underground, could produce approximately 7 billion barrels of oil.

If so, that would more than double the state’s oil reserves.

Louisiana has around 3.9 billion barrels of proved oil reserves, according to the latest figures from the federal Energy Information Administration. Proved reserves are oil that’s economically feasible to recover.

Barrel said it’s  impossible to estimate the shale’s reserves because no one knows whether the oil can be produced.

Chacko John, the lead author of the report and director of the Louisiana Geological Survey, said the Tuscaloosa Marine Shale formation is deep and under high pressure.

At the time the report was published, horizontal drilling techniques that have now made shale development possible had not been perfected for this particular shale, John said.

The same was true just three years ago, when Fort Worth-based Encore Acquisition Co. drilled four horizontal wells in the formation.

Encore officials said the company became interested when three wells being drilled to a deeper formation blew out when they hit the Tuscaloosa Marine Shale. Encore ended up leasing more than 200,000 acres in the shale.

During a first-quarter 2008 earnings conference call, Encore’s then-Chief Executive Officer Johnny Brumley called the shale “a huge resource.” In a review of transcripts of the call, he said Encore was excited about bringing in the first well.

At the time, oil was selling at $100 per barrel.

But by February 2009, when Encore issued its 2008 annual report, the credit markets and oil prices were tanking. Brumley was considerably less enthusiastic with oil at $40 a barrel. Although one Tuscaloosa Marine Shale well was producing 500 barrels a day, Brumley told analysts that the shale had become a more difficult proposition.

Encore, he said, was now focused on repaying debt.

By the end of 2009, Encore had shut in the wells and written off all $69.5 million in Tuscaloosa Marine Shale assets.

Collins said Encore, a player in the Bakken, thought it could use the same drilling technique in the Tuscaloosa Marine Shale.

“You can’t do that. The reason is all these shale basins are different,” Collins said.

Geologists knew about the Bakken Shale in the 1970s, but decades passed before anyone figured out the right approach, Collins said. Even then, it took drilling four or five wells to perfect the technique.

Collins said the same thing can happen in the Tuscaloosa Marine Shale.

“If you tell a geologist that there is potentially 7 billion barrels recoverable … somebody’s going to figure a way to get it out,” Collins said.

If that happens, the shale could change the face of communities in East and West Feliciana, St. Helena and Tangipahoa parishes, Collins said. The shale could create an economic boom.

The surge may be close.

Surveying work, one of the final steps before asking the state Office of Conservation for a drilling permit, is under way on the property of one of Ligon’s clients.

Ligon said he expects a well will be drilled within months.

Meanwhile, Collins will keep working to get his landowners more money.

The leasing firms are offering $100 to $150 an acre now and a maximum royalty of 20 percent of production, Collins said.

“In simple, plain English, that’s ridiculously low,” Collins said.

Leases in the Haynesville Shale — the natural gas formation in northwest Louisiana — started around $300 an acre and at the high point were running $20,000 an acre, Collins said. The royalties were up to 25 percent of the well’s revenue.

However, Ligon said, he and many other landowners feel differently about pricing in the Tuscaloosa Marine Shale after years of no leasing activity.

“We’re just glad to see someone take an interest here,” Ligon said.

• ▶ Reply

Permalink Reply by Kirk Barrell on February 13, 2011 at 13:11

Abington,

I start a forum on the Tuscaloosa Marine Shale this morning with this article. Some early discussion going on.

Kirk

• ▶ Reply

Permalink Reply by blackjackjackson on February 13, 2011 at 13:18

kirk, i don't mean to hijack a discussion, BUT, i hope this adds.

Eagle Ford in n.w. Rapides?

rumor from man who had the last closed well near hot wells(90's), the companies that are leasing lots of land in n.w. rapides are actually looking for the EAGLE FORD SHALE.  this includes indigo minerals which is part of a huge lumber company, roy o. martin.

notice map:

http://www.energyindustryphotos.com/eagle_ford_shale__formation_of_...

eagle ford could easily extend into n.w. rapides parish.l notice map:

 

also, great article that mentions Cheasapeak and Eagle Ford.

http://www.google.com/hostednews/ap/article/ALeqM5j19p_VRpnsy7NiY3O...

 

• ▶ Reply

Permalink Reply by Kirk Barrell on February 13, 2011 at 15:14

The current outstanding technical question is "why is the Eagleford equivalent section in Rapides 1-2 ohms vs 20 ohms in S. Tx? Is 1-2 ohms indicative of hydrocarbons?

• ▶ Reply

Permalink Reply by Two Dogs, Pirate on February 13, 2011 at 15:45

Kirk from what I understand the Eagle Ford goes through a name change and becomes the Tuscloosa Marine Shale at some point in its Eastward migration.

• ▶ Reply

Permalink Reply by Kirk Barrell on February 13, 2011 at 16:06

Two Dogs,

The Eagleford is geologically younger than the TMS. From youngest to oldest would be: Austin Chalk, Eagleford, TMS, Tuscaloosa Sands.

• ▶ Reply

Permalink Reply by Two Dogs, Pirate on February 13, 2011 at 16:32

I will defer all questions to Jay on this matter because I am not a scientist and he is. I trust what Jay says.

• ▶ Reply

• ‹ Previous
• 1
• …
• 4
• 5
• 6
• 7
• 8
• …
• 15
• Next ›
• Page