Replies to This Discussion

Permalink Reply by Steve on December 3, 2012 at 10:56

Is Anadarko drilling these well a good thing for Vernon Parish? Some would say no, if the rumor is true that Anadarko recently killed the AC play in Pointe Coupee and W.Fel. with their risky and on-the-cheap drilling and completion techniques.  If that rumor is a true assessment, I hope they learned a few lessons and will not recreate the disaster.

Permalink Reply by Skip Peel - Mineral Consultant on December 3, 2012 at 11:12

I would suggest to those who would say "no" that they review the AC wells APC has already drilled and is drilling in Vernon Parish.  IMO, that would be a more meaningful comparison than wells in Pointe Coupee and W. Feliciana.

10 242887 AUS C RA SUK;GASRS 16 001 07-MAR-11 A162 016-02S-11W 2117 BURR FERRY, SOUTH 21912 291

10 244416 AUS C RA SUH;GASRS 23 001 07-FEB-12 A162 023-01S-11W 2117 BURR FERRY, SOUTH 22227 296

10 244429 AUS C RA SUR;GASRS 29 001 09-FEB-12 A162 029-01S-11W 2117 BURR FERRY, SOUTH 21003 297

10 244652 AUS C RC SUK;FORESTAR MIN 18 001 28-MAR-12 A162 018-01S-09W 7388 PINEWOOD 21507 298

10 244860 AUS C RA SUS;GASRS 34 001 11-MAY-12 A162 034-01S-11W 2117 BURR FERRY, SOUTH 20892 299

01 245071 AUS C RA SUM;GASRS 15 001 21-JUN-12 A162 015-01S-11W 2117 BURR FERRY, SOUTH 20205 300

01 245641 AUS C RA SUG;GASRS 29-1-10 001 02-NOV-12 A162 029-01S-10W 2117 BURR FERRY, SOUTH 21070

Permalink Reply by Steve on December 3, 2012 at 13:21

No oil wells to compare?

Permalink Reply by Skip Peel - Mineral Consultant on December 3, 2012 at 13:39

They are all oil wells to varying extents.  Other than deep wells producing exclusively dry natural gas such as the Haynesville Shale, most wells produce a mixture of hydrocarbons.  Many state reporting criteria lump liquid fractions together or completely ignore certain fractions.  How many LA wells have you seen reporting natural gas liquids (NGL's)?  And using S/N 242887 as an example;  the IP report lists 200 barrels of condensate per day (BCD) yet in the Lease/Unit/Well Production portion of the well file there is no mention of condensate.   All the liquids are lumped under the general heading of "oil".  The state does not require the operator to break out the production into all its general categories,;  oil, NGls, condensate and gas.  I see mentions of oil wells often on the site that are actually "liquids and gas" wells.  If a well produces more than 50% oil, it is an "oil" well.  It it produces less, even if its as much as say 33%, it's a "gas" well.  The only place you will regularly see a break out of the varying hydrocarbons in a class of wells is in the presentations and press releases of operators.

Permalink Reply by dbob on December 3, 2012 at 13:57

The field locations are a bit further south than I had expected, but APC has been fairly successful with Austin Chalk wells to the west in Texas.  I think beyond Austin Chalk, there may be Eaglewoosa interest here.....

Permalink Reply by Skip Peel - Mineral Consultant on December 3, 2012 at 16:32

Eaglewoosa = Eagle Ford/Tuscaloosa, correct?

Permalink Reply by dbob on December 3, 2012 at 17:01

Yeah - I think in the position they are in its potentially perspective for what there would be called TMS - The basic data being shared in investor presentations shows Eagle Ford/Woodbine into Polk County, Texas, with some possible pinch out for the Sabine Uplift.  Tyler and Newton County are kind of a grey area, with the exception of some existing, conventional Austin Chalk.  

I think they (APC Vernon Parish) are north of the Sligo Shelf and generally on trend with with that observed to the west.  There is also some interplay with the James Lime - I think, but i'm not sure, that where you get into the influence of the Sabine Uplift, the James Lime is the more important 

Permalink Reply by Skip Peel - Mineral Consultant on December 3, 2012 at 17:08

The only James Lime completion I recall on this side of the pond  in the last few years is:

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_wellinfo2...

Permalink Reply by dbob on December 3, 2012 at 17:15

Thanks - I get the stratigraphy confused a little bit, but the Glenrose is part of the Eaglebine stack in this neck of the woods.  The Sabine Glenrose wells that have been recently permitted would match well with roughly the north end of the Eaglewoosa.  You may want to check out some of Halcon's and ZaZa investor presentations - it would be nice if they would show the geology on the Louisiana side, but the basic analog should be there, at least where the Sabine Uplift hasn't changed it too much.

Permalink Reply by Skip Peel - Mineral Consultant on December 4, 2012 at 4:24

As to "oil" wells or "gas" wells here is a good article on the subject from the Eagle Ford Play.  Added emphasis is my own.

Finding the sweet spots of the Eagle Ford - FuelFix article

GONZALES COUNTY — The best spots in the Eagle Ford Shale play were a closely guarded secret a few years ago as oil and gas companies quietly leased thousands of acres.

Today, the word is out.

It’s spreading though corporate regulatory filings, word-of-mouth gossip and data tracked by everyone from industry analysts to government regulators.

Even though companies have largely locked in their acreage, an intense race to find the sweetest spots means that nearly as soon as an oil and gas company hits a good well, other companies cluster drilling rigs nearby — often within sight of each other — to try to replicate the results.

The roar of the truck traffic, the tedious lines at the convenience store or the roustabout’s dust-caked boots are a visible sign of what’s happening a mile or more below the surface as companies use horizontal fracturing to break open shale rock and release trapped hydrocarbons.

The counties inundated by the most workers and 18-wheelers are also the most profitable for oil and gas companies.

The Eagle Ford Shale reaches across 25 Texas counties. But more than 60 percent — 141 of the play’s 227 drilling rigs — are operating in five counties: La Salle, Karnes, McMullen, Gonzales and DeWitt, according to the Baker Hughes Rig Count, a barometer of the health of the drilling industry and an indicator of where companies are most interested in drilling

Rigs are clustering along the Gonzales-Karnes county line, and lining up across all of DeWitt County, except for the southeastern quadrant.

Farther west, neighboring La Salle and McMullen counties have earned a reputation for being what’s colloquially called “more oily,” producing more crude oil or natural gas liquids than the currently uneconomic dry gas.

La Salle County has the most active drilling rigs of any in the Eagle Ford — 36 as of Nov. 16 — and they are concentrated on the northwest swath of the county. Neighboring McMullen County had 31 drilling rigs, all in its northern half.

“It’s an area that for whatever reason is more economically productive,” said Harvey Howell, a third-generation, San Antonio-based oilman. “For the sheer volume of dollars you have to pump into this thing, you have to go where you can get the most back fastest.”

J. Michael Yeager is CEO of BHP Billiton Petroleum, the Houston-based oil and gas arm of the Australian mining giant that bought Petrohawk Energy Corp. last year for $15.1 billion. Petrohawk was among the earliest companies in the shale play and in 2008 drilled the first successful Eagle Ford well in La Salle County.

BHP is running 30 drilling rigs in the Eagle Ford, and many of those are in DeWitt County.

Eagle Ford wells cost $7 million to $10 million, but Yeager said they pay back within half a year.

“The Eagle Ford has become the most profitable field in the world,” Yeager said. “Fifty percent of every well is oil, and we get $100 a barrel for that oil.”

Becca Followill of U.S. Capital Advisors LLC said companies operating in Gonzales, DeWitt and Karnes counties have seen initial rates of return higher than 50 percent, with some wells as high as a 70 percent.

“There’s always sweet spots in the oil and gas industry,” Followill said.

Part of the Eagle Ford’s profitability has been practical in nature, including relatively quick access to coastal refineries. Moving oil by rail from the Bakken field in North Dakota can add $10 to $12 to the production cost per barrel, Followill said.

“Infrastructure has been put in place much more quickly in the Eagle Ford,” Followill said. “It’s a favorable environment and terrain. There’s been drilling in South Texas before. It’s not like we’re going into areas of Ohio where they’ve never had drilling.”

But really, the high profitability all comes down to the rocks.

“I think it’s a function of geology,” Followill said. “It’s nice to have the infrastructure, but it really comes down to the geology.”

The Eagle Ford Shale was deposited millions of years ago in the Cretaceous Period when much of Texas was a shallow sea. It’s 50 miles wide and extends about 400 miles across the state, from the border to East Texas.

The formation generally produces more oil on its northern arc; more natural gas, or “dry gas” on its southern arc; and more natural gas liquids such as propane and butane in-between. Wells generally bring up a bit of everything.

For now, the Eagle Ford is a liquids play. Depressed natural gas prices have prompted companies to shift drilling to areas of the Eagle Ford that produce a greater percentage of crude oil or natural gas liquids.

The price of crude oil is hovering between $85 and $100 a barrel. Meanwhile, natural gas prices that in 2008 rose above $12 are now below $4 per million British thermal units.

More than 70 percent of the rigs working in the Eagle Ford are drilling primarily for oil, while 23 percent are focused on gas, according to Baker Hughes.

Allen Gilmer, chairman and CEO of Drillinginfo, said the Eagle Ford’s quality varies across South Texas, but the five counties with the most drilling rigs are hot spots for a reason.

Gilmer said Gonzales and DeWitt counties are “looking really good for oil.”

Karnes County has good oil production in the northwest corner and good natural gas liquids in the southwest corner, and neither in the southeastern corner. But Gilmer said that when dry gas prices rise, southeastern Karnes County will be “the center of all goodness.”

“The first places to emerge for economics for dry gas are going to be right in that area,” Gilmer said. “Karnes is pretty well-blessed.”

Oil production isn’t as good in Atascosa County, but picks up again around the La Salle County line. La Salle County and McMullen County are both strong for oil production. And while McMullen County isn’t a great area for natural gas liquids, Gilmer said there’s a sweet spot for wet gas in the northeastern part of the county.

Most companies are loath to talk about the specifics of their drilling program for competitive reasons.

“They’re cagey about where they think it’s good. And they’re cagey about what they’re doing to make it produce,” Gilmer said.

But information filters out anyway, often through quarterly earnings calls with analysts or by the old-fashioned method: small-town gossip.

Yeager said companies have about 90 days before word spreads about a good well, often through small talk.

Because companies typically drill as close as possible to the edge of their lease line — giving them the ability to drill horizontally across the biggest percentage of their acreage — competing companies often are operating within sight of each other.

Yeager said that as soon as a neighboring operator hears about a good well, “that SOB is right up next to your well. They’re right there,” he said.

Some of the most specific information on operations can be found in the quarterly reports filed by publicly traded companies or in company conference calls with investment analysts.

In a Nov. 6 call with analysts, David Roberts, chief operating officer and executive vice president of Marathon Oil Corp., said the company was running 18 drilling rigs in the Eagle Ford and four full-time fracking crews, and that half of the company’s activity is in Karnes County, a quarter is in DeWitt or Gonzales counties.

“So the three core counties is where we do most of our work,” Roberts said.

Roberts called the Eagle Ford a “company maker” and said it’s “some of the best real estate in North America, if not the world today.”

The company’s third-quarter report noted that one of its Gonzales County wells reached a production level of 6,275 barrels per day, and of that, 4,646 barrels were oil and natural gas liquids.

EOG Resources holds the largest acreage position in the Eagle Ford, including more than 570,000 acres in the oil window, according to Hart Energy, and has said this year in calls with analysts that it completed 28 “monster wells” in a six-month period, which it defines as having initial production rates from 2,500 and 4,800 barrels of oil per day, plus gas and natural gas liquids.

In Gonzales County, one of its wells tested at 4,598 barrels of oil per day. The company said it expects to shift more resources to the Eagle Ford and Bakken next year because those are “black oil” plays.

As companies focus on those sweet spots for production and profitability, it’s driving a frenzy of logistics activity. Trains and trucks are moving supplies and oil, while processing plants and thousands of miles of pipelines are being built to move natural gas.

DeWitt County Judge Daryl Fowler thinks of Cuero as the divide between quiet, rural life and frenzied oil field activity. “Everything west of there is wet liquids, which is what they’re after,” Fowler said. “The natural gas is on the east side of that line.”

He estimates, based on the more than $71 million in state severance taxes paid by DeWitt County producers in six months this year, that the county produced something in the neighborhood of $1 billion in oil and gas.

Near Harwood in northern Gonzales County, the oil field activity is evident in the wail of a train’s whistle and the clink that echoes through the yard as contract workers sledgehammer new track into place.

Since last summer, the Texas, Gonzales and Northern Railway Co. has doubled its track to 25 miles. The rail line still moves traditional commodities such as grain and chickenfeed, but now it’s also moving fracking sand — and lots of it. The rail line has gone from three employees to 30 to handle the volume, and several oil field service companies such as Halliburton have built facilities there.

“This will all be filled up with tracks and warehouses,” manager Jason Gill said, gesturing to a grassy area that still looks more ranch than industrial site. “This is a good place. You wouldn’t have thought it a few years ago.”

jhiller@express-news.net

Permalink Reply by Joe Aldridge on December 4, 2012 at 3:22

Dbob,

There is a difference between the completion of the Texas wells and the Louisiana wells. The well that was so successful by APC in TX was treated with a high amount of acid (over a 1,000 bbls)if my memory is correct and then was followed with a "slick water" treatment. To my knowledge, none of the LA wells have been treated this way. One has to wonder why. This is what I tried to get across from the beginning when APC moved in and started drilling the AC. My other problem with their methods is the long laterals they try to drill. Why would someone drill and plug the formation with mud at the same time. You just can't control the mud infiltration in a naturally fractured formation and a long lateral just does not make sense.

For everyone's information: There seems to be activity to the Southeast - South of I-12 in the Livingston area. Rumor has it that someone is raping up a 3-D seismic survey with the intent of drill a AC well in the near future. It will be interesting to see if someone has learned anything about drilling the chalk in Louisiana.