Views: 35360

Replies to This Discussion

For LSU students, sandy Thompson Creek was a good place to skinny-dip.

Australis talking Austin Chalk in the TMS area for the first time

New Article In Houston Chronicle from today / nothing really new - just more press on AC play revival.

I hi-lighted a few comments.

Curious where the info on the permeability differences came from, but the comment about geological changes is a comment that everyone should remember since "not all AC is created the same".

And this article clearly points to Frac'ing being needed to make this new AC play work

===========================================================================

Aging oil play getting new life

The next frontier for U.S. oil's resurgence may come on familiar terrain.


The Austin Chalk, a vast underground ribbon of rock along the Gulf Coast, is garnering new attention this year, with drillers including ConocoPhillips and EOG Resources Inc. trumpeting efforts in an area the industry largely wrote off 20 years ago. Just last week, private-equity giant Blackstone Group LP sold royalty rights in the region for more than $400 million.

The revival is the latest testament to the oil industry's improved health, with crude prices near $70 a barrel after a painful three-year slump. Explorers are betting the kind of drilling techniques that led to a boom in U.S. shale plays can also work on the harder, more unpredictable rock in the Austin Chalk.


Quality
"It is a play that I think is going to have a lot of legs," said Bernadette Johnson, a vice-president for researcher DrillingInfo Inc.

Blackstone's sale followed a $2.7 billion deal in March by TPG Pace Energy Holdings Corp. to buy drilling rights on 360,000 acres in the Austin Chalk and the neighboring Eagle Ford shale basin. Conoco later announced it had grabbed 211,000 more acres while Marathon Oil Corp. said in May that it had acquired a " material position" in the Louisiana portion of the play.

The Austin Chalk's now home to "some of the most prolific and highest return wells in the company," EOG Executive Vice President Ezra Yacob told analysts on a call May 4, though he warned it's "still pretty early" in the area's development.

Here's a closer look at what's generating all the furor:

What is the Austin Chalk?
It's a 650-mile long geological formation, stretching underground from the Mexico-Texas border, through central Louisiana and into Mississippi. As the name suggests, it's a river of underground chalk -- soaked with oil and natural gas. That differentiates it from shale plays like the Eagle Ford or Permian that have been the target of U.S. drilling in recent years.

Explorers have been tapping "The Chalk" since the 1930s, and some of the hydraulic fracturing and horizontal drilling techniques that powered the U.S. oil resurgence were pioneered here. The most recent boom came in the 1990s, but since then, the region's been eclipsed by more profitable shale plays.

How much oil and gas does it hold?
In a word: Plenty.


The U.S. Energy Department estimated in April that the Austin Chalk holds about 4.1 billion barrels of crude, 18 trillion cubic feet of gas and 1 billion barrels of natural-gas liquids that are "technically recoverable" (a measure that doesn't account for economic viability.) That's about a third of the nearby Eagle Ford and on par with the Niobrara shale play in eastern Colorado.

But the Austin Chalk has a history of wells that start strong and decline quickly, industry consultant Wood Mackenzie Ltd. said in an April report. That's particularly true in the less-explored Louisiana side, where much of the new activity is targeted. The area has a naturally fractured geology that's more varied than shale, said Jud Walker, president at EnerVest Operating Co. The Houston driller announced a new venture with TPG Pace in March.

"It is much different than a shale play," Walker said in an interview. "The Chalk changes pretty rapidly over small distances, so you have to do a lot of geology to understand where it's going to produce. "

Why was it initially abandoned?
The Austin Chalk's past surges came long before the heyday of "unconventional drilling," which uses fracking and other techniques to crack open underground rock and free up oil and gas.

Conventional drilling produced big gushers in the '90s, but wells quickly petered out and the industry moved on. Experiments with unconventional drilling in the 2000s were underwhelming -- the jumbled mix of fractures and reservoirs in the chalk made underground reserves too hard to pinpoint, said DrillingInfo's Johnson.

So why are they back now?
Because drillers can, once again, afford to gamble a bit.
With West Texas Intermediate crude prices rising, explorers are more willing to bet that they can crack the Austin Chalk code. Innovations including more powerful fracturing of underground rock. longer horizontal wells and computer-guided drill bits have boosted results fivefold in some cases, Wood Mackenzie said in April.

The play overlaps the Eagle Ford in parts of Texas, and the proximity to pipelines and other infrastructure serving that shale play should also lower costs, explorers say. That's a big attraction at a time when drillers in the Permian have been forced to sell their barrels at steep discounts to account for a lack of shipping capacity.

EOG caught the industry's attention last year when its Eagles Ranch 14H well in Louisiana's Avoyelles Parish produced a robust 80,000 barrels over 110 days, Wood Mackezie said.

Do the economics work?
The average Austin Chalk well in Karnes County, Texas, breaks even at about $37 a barrel, Bloomberg New Energy Finance analyst Tai Liu estimated in an April report.


In Louisiana, EOG's initial experience suggests wells may cost about $10 million a piece, Wood Mackenzie said. That's more than double the cost of some Eagle Ford projects, a hurdle drillers will have to overcome.

Louisiana chalk is about five times less permeable than rock in Texas, meaning, "you've got to frack it really hard to get access to that reservoir," WoodMac analyst Brandon Myers said in a phone interview. "It's a question of 'is there a point where you can do that huge frack and still be economical?' That's what they are trying to answer."

What's the industry saying?
Conoco won't have results from pilot projects until next year. EOG, meanwhile, plans to complete 25 more Austin Chalk wells this year and sees further growth ahead, Yacob said on the May call. He declined to estimate the ultimate size of the opportunity.
Developing this play is "not quite as straightforward" as others, Yacob said. "It is different and it's unique."

Marathon, meanwhile, is still in the appraisal stage of its Louisiana push, CEO Tillman told analysts in May. "Until we are able to get out in the field, do the necessary technical work and get some wells down, we don't really know what we have here," he said. "But it's exciting."

Rock Man-can you post the link to the Houston Chronicle article, I looked at there site but didn't see it . Thanks

Boy Skip, you are Johnnie-on-the-spot. Thanks for the link, appreciate it !

We just learned yesterday that Cypress Energy sold our acres along with another 7,000 acres in EBRP to Bayswater Fund III-A, LLC and Bayswater Resources LLC of Denver, Colorado.  Cypress said Bayswater would be the operator.  Would anyone have any comments about Bayswater.

Thanks,

John EBRP

John, you might want to think about starting a separate discussion for Bayswater Resources in order to make the subject easier to find.  There is no operator listed with the state by any name starting with Bayswater.  There is a website (seemingly under construction) with very sparse information for Bayswater E&P.  Link follows.

http://bayswater.us/opera.html

The company can always apply to be a LA operator or they could hire a contract operator for the actual drilling.  7,000 acres in this play is nothing but a decent start.  They must have more or plan to acquire more.

Bayswater is active player in Permian Basin - drilling 10,000' horizontals chasing Wolfcamp in Midland Basin.

Management team has a lot of high end experience.

http://www.bayswater.us/people.html

Skip - I found a back door to this info on their management team

Rock Man, Cypress (Bayswater) leases  joins BlackBrush  North Cheneyville SUA  on South and East...

I wonder if Bayswater is a non op WI partner in the Blackbrush block? Or that they have some sort of a Joint Operating Area (JOA)?

But could be totally independent operations competing for the same turf?
Thanks for pointing this out - I don't have a "mental map" to put these blocks together 

Good to know they have Wolfcamp experience.

RSS

© 2018   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service