Welcome back, Aubrey.

http://www.gohaynesvilleshale.com/profile/AubreyCSandersJr757?xg_so...

The following article was in the El Dorado paper 05/27/2011 about leasing in S AR/N LA.

http://www.eldoradonews.com/news/localnews/2011/05/27/major-produce...

L Davis,

I could only read part of the article and I don't want to subscribe to the paper. Can you give a summary.

Thanks

For those of you who cannot access the full article.  It was a talk to the local Civitan Club by Rob Reynolds Director of Shuler Drilling of El Dorado.  A large unnamed indepentent was leasing in S Ar/N LA and that 300,000 acres had been leased out of a total area of about one million acres.  A summary of the Lafayette and Columbia county wells that were disappointing.  The target area was the lower Smackover.

Pretty generic and nothing new that I could determine but is the first that has been in the paper.  Hope this helps.

Thanks

The counties referenced were Union, Columbia, Lafayette and Miller counties in S AR.  Union and Claiborne parishes in N LA.

I tried to copy and post the entire article but it was copy protected and would not copy. 

  Here is the complete article.  Let me know if you are unable to read it.

           
       Major producer’s presence felt as area oil leases are grabbed up
            By: Allison Gatlin - - Published: 05/27/2011

            Quietly, a large independent oil company has been leasing lucrative mineral-rich land in southern Arkansas and northern Louisiana, Shuler Drilling Director Rob Reynolds told members of the El Dorado Civitan Club Thursday afternoon.

      The name of the company and its ultimate intentions are still under wraps, but Reynolds said the potential entrance of a new producer in Union County — where the company has leased approximately 300,000 acres — would be an added economic benefit to the area.

      Total acreage is approximately one million and includes areas in the southern halves of Union, Lafayette and Miller counties, and the northern halves of Claiborne and Union parishes, he said.

      Reynolds said he imagines the company is most likely interested in the Smackover Limestone area, which has been tested, but not yet produced.

      “I think that’s what this present leasing activity has in mind is if somebody can do it and hopefully do it better, it would be one of the best things to ever happen to Union County if it were to come to pass,” he said.

      Two test wells were drilled in 2010 in Lafayette County and Columbia County that ultimately reaped little benefit to the company, Reynolds said.

      The first was a completely vertical well that was eventually plugged following testing. The second, he explained, was drilled vertically and horizontally in the lower part of the Smackover Limestone at a cost of $12 million, but only produced about 100 barrels a day.

      “It was, what I would call an uneconomical well,” he said. “In testing it only produced around 100 barrels a day, that’s a lot of oil for Smackover and El Dorado but it won’t pay for $12 million.”

      It all comes down to tight rock samples in the Smackover Limestone which have caused hesitation among producers unwilling to expend money testing rock that may be too dense to produce, he said.

      An independent producer himself with years of experience under his belt, the bulk of Reynolds’ presentation dealt with the history and fine print of oil and gas production today.

      He touched on the first days of crude oil production in the mid-19th century which has since grown to encompass 33 producing states. Though America might only be the third largest oil producer, the country is the number one consumer and employs the highest number of operators – 17,874 – he said.

      “Because of those independents there are more operators in the United States than there are in the rest of the world put together,” he said.

      Interest in oil and gas has skyrocketed with federal regulation threatening to rain down legislation on production, prices at the pump jumping for drivers nationwide and heavy discussion concerning a complete overhaul of the tax code, Reynolds said.

      Among these interests, Reynolds listed the controversial process of hydraulic fracturing which allows producers to drill oil from tight rocks.

      Skeptics say the process only serves to pollute the water supply, he said, adding that he gives little credence to this criticism.

      “To my knowledge there’s never been freshwater supply contaminated by fracturing,” he said. “Here in Union County, fracturing has been used since 1950. We don’t know the exact number of fracture jobs in Union County, but it’s about 1,000 and we, on the water side, never found any of those fracture products in the water.”

      Probed by questioning, Reynolds also touched on the production of partial or complete natural gas-run vehicles, which he said are created almost exclusively in California and Oklahoma where the infrastructure makes sense.

      Rolling out with these vehicles in other states would be “haphazard and chaotic,” he said, likening it to the competition between VHS and beta video cassettes.

      As natural gas is not a liquid, but actually a highly-compressed gas, to run a vehicle on a combination of oil and natural gas would require two separate tanks to account for the differing pressures, he said.

      Reynolds added that adapter kits are available, but wouldn’t make much sense until a national push for natural gas vehicles and stations was made, and he didn’t imagine the federal government would be successful in those efforts.

      “It runs wonderfully. The octane is about 130, there are no performance issues, it’s a matter of availability,” he said. “Honda has continued to make a vehicle that runs exclusively on natural gas and I think those are going to be isolated in California and Oklahoma City until there’s a national development.”

Arkansas Democrat-Gazette 

Oil companies are snatching up mineral rights on thousands of acres in the old Smackover oil field, which has yielded little since its boom days in the 1920s and ’30s. 

Why the renewed interest? 

Advanced hydraulic fracturing has awakened slumbering oil formations in Texas and elsewhere in the country. 

“This is the biggest thing to happen to U.S. oil in 40 years,” said Raoul LeBlanc, a financial adviser with PFC Energy, a Washington-based oil and natural gas research and consulting firm. “Oil production has been in decline for 30 years, but last year it went up and it will go up again this year.” 

U.S. production peaked in 1970 at 9,637,000 barrels a day. By 2000, the number had fallen to 5,822,000. In 2008, fewer than 5 million were produced, before the uptick in 2010 pushed it to more than 5.5 million, according to the U.S. Energy Information Administration. 

In Texas, the Eagle Ford Shale was once a rich oil field. But in 2009 fewer than 30 well permits were granted in the 22-county area. 

In 2010 that number jumped to more than 1,000, and more than 500 in the first quarter of this year, according to the Texas Railroad Commission, which regulates oil and gas. 

Eagle Ford could produce 420,000 barrels of oil a day — or almost as much as Ecuador — according to LeBlanc. 

The largest oil field in the United States that is being developed with fracking is the Bakken formation in Montana and North Dakota, which produces more than 450,000 barrels a day. Before 2009, the oil in the Bakken field was mostly unreachable. It was there that a geologist first tried extracting oil via fracking. 

“It essentially helped keep North Dakota out of the recession,” LeBlanc said. 

Though fracking has been around for 60 years, in the past decade improvements have been made to the method, allowing highly successful extraction of natural gas from rock formations such as the Fayetteville Shale in northern Arkansas. 

Fracking unlocks natural gas — and now oil — by breaking up rock formations with millions of gallons of pressurized water mixed with chemicals and sucking the minerals out of the ground. 

Fracking is not without its critics, however. Bill Kopsky of the Arkansas Public Policy Panel, a group that lobbied for stricter fracking regulations during the 2011 legislative session, said that it could harm the water supply. 

There are also concerns that the sheer amount of water used in the processes could deplete supplies, Kopsky said. Most of the fracking water in Arkansas ends up in injection, or disposal, wells, never to be reused. 

The drilling success in south Texas has led to an increased number of jobs and economic activity in an area considered one of the poorest in the country, according an economic impact study published by the University of Texas at San Antonio in February. 

“Under modest assumptions, by 2020 the Eagle Ford Shale is expected to account for close to $11.6 billion in gross state product, $21.6 billion in total economic output impact and support close to 67,971 fulltime jobs in the area,” according to the study. 

But that hasn’t stopped companies from exploring different drilling possibilities. 

“Right now, [exploration around the country] is going on like crazy,” LeBlanc said. “Prospectors, drillers and land guys are all out trying to find the next Eagle Ford or Bakken.” 

He said that the new fracking technology and high oil prices make the risk-versusreward ratio favorable, prompting “people to look for all types of new plays.” 

There is little expectation the Smackover formation will produce nearly as much oil as Eagle Ford and Bakken have, LeBlanc said. Geologists suspect that there are natural fractures already in the rock that made it easier to reach the oil in the 1920s, he added. 

In the Smackover field, two companies have been leasing mineral rights for about $275 an acre. An acre in Eagle Ford can go for more than $10,000, but was about $200 before it took off. 

Rob Reynolds, who owns Shuler Drilling in El Dorado, estimates that Alabama-based Pinebelt Energy Resources Corp. has leased about 300,000 acres in southern Union County. 

“I looked at the south half of the county, which is the area where the land professionals are working, and compared it to the whole county,” Reynolds said. He said there is no precise way to know exactly how much Pinebelt has leased in Union County, even by combing land records at the circuit clerk’s office. 

A spokesman for Pinebelt said he was not permitted to say which oil exploration firm he represents or how much the company has leased. 

One company, Shreveport-based Brammer Engineering, drilled a horizontal well in December but it produced only 49 barrels of oil a day, records show. It would take about 400 barrels a day to pay for the $10 million well, LeBlanc said, adding that it could take between 15 and 30 tested wells before geologists determine if the play is feasible. 

Triad Land Services of Tyler, Texas, has requested permission from the Arkansas Oil and Gas Commission to “integrate” a section, or 640 acres, southeast of Magnolia. A majority of mineral rights in one section must be leased to allow drilling. According to Triad’s request, it has obtained that majority. 

Shane Khoury, general counsel for the commission, said the request was made in early May and it would take at least a month before it is considered. Exploration for oil in the Smackover field is in the beginning stages, he said. 

According to Triad’s request, it plans to spend about $10 million on the proposed “There is a significant economical and mechanical risk associated with the drilling and production of the proposed well because the lower Smackover has only been sparsely tested,” independent Arkansas geologist Ken Fritsche wrote in an affidavit. 

Fritsche said that the nearest significant well was drilled in 1982 and produced only If a substantial amount of oil is found, it would be the biggest development in the Smackover field since 1921, when oil was discovered there. Since then, it has been “I’ve heard Smackover called a pin cushion, it’s been drilled so much,” Reynolds He The first major development in the Smackover formation was the Busey-Armstrong No. 1 oil well. It drilled nearly a half mile into the earth before unleashing a big Production hit a peak in 1925 with an output of 69 million barrels, according to the commission. The Encyclopedia of Arkansas said that oil companies were unchecked, allowing oil and natural gas to gush out of the earth like a punctured aerosol can, further depleting the minerals. 

In 1923, the town of Smackover had grown to 25,000 roughnecks and others, many of whom enjoyed the saloons and brothels. As the field played out, the population quickly decreased to one-fifth of its boom size and oil companies turned their attention to fields in Texas and Oklahoma. (The current population is about 1,800.) 

“Lately, it’s been the scrap left over by the major companies,” Reynolds said. “It’s been truly marginal wells.”

Well permits and unit apps are welcome but when will J-W or Triad actually drill a well?  It's now 4 months since the permit was issued for the J-W horizontal in Union County and 3 months from the date they set in their application for the commencement of work and still no spud date shown in the AOGC database.  Anyone got a report of activity at the drill site? 

North La

Last year,  Murphy E&P completed the Drees A-79 1-H well in the Eagle Ford in Karnes County, TX.  The well had a 15 stage  fracture treatment along a lateral section of 4,985 feet.  The initial flow rate was 1,462 barrels of oil and 1.25 million cubic feet of gas.  I have no idea if there is any correlation between the Eagle Ford and the brown dense but wonder if this many frac stages will be required to do anything with the brown dense?

L. Davis,

From what I've read, I understand the Tuscaloosa to be the equivalent to the Eagleford in Louisiana both are crestaceous whereas the smk is jurassic. I have read some papers that describe an Austin chalk/eagle ford/smackover source rock. Maps I've looked at show the Smackover below the eagleford until eastern texas at which point the smk turns north and then straightens east along the LA/Ark border until it gets to miss at which point it turns southeast. I've also read that the characteristics of the eagleford are similar to the smackover but they are not the same formation.

This short reprot was on the June 12 Ch 7 news out of Little Rock. 

'Million dollar question' looms over Smackover oil

This is an expanded version of the Ch 7 article that was in the El Dorado Paper today.

Oil in Smackover Formation

Can it be tapped? That’s the ‘million-dollar’ question

Oil-soaked well crews were a common sight around El Dorado and Smackover in the early 1920s.

By CHUCK BARTELS

Associated Press

SMACKOVER (AP) — Oil companies have been furiously buying leases in south Arkansas in hope of getting a share of oil trapped in limestone almost two miles beneath the ground.

Whether that oil can be tapped affordably remains to be seen.

“That’s the million-dollar question,” said David M. Schoeffler, senior project manager for Schoeffler Energy Group in Lafayette, La.

Schoeffler said the firm was “very much involved” in buying leases for a client, despite the uncertainty of the find.

The oil is in what’s known as the Smackover Formation, which is different from the shallower Smackover Field, a source of oil in Union County since the boomtown days of the 1920s.

The town of Smackover, population 2,000, is home to the Arkansas Natural Resources Museum, formerly known as the Oil and Gas Museum. An introductory display explains the various layers of rock and oil deposits beneath the ground, but it only goes down to 8,000 feet.

The oil that’s creating the excitement is trapped in limestone between 9,000 and 10,000 feet deep. It has been tapped by one exploratory well, which only pumped out about 45 barrels per day, said Lawrence Bengal, director of the Arkansas Oil and Gas Commission.

Even at prices near $100 per barrel, that’s hardly enough to pay for an investment of more than $10 million, especially considering that oil wells produce a diminishing return as the supply is tapped out.

Another firm has applied for a permit to drill a second exploratory well.

Bengal and others say drillers need time to perfect the method, just as natural gas drillers in the Fayetteville Shale play needed time to work out the technique of using water and chemicals pumped in to the ground at high pressure to fracture rock and extract the fuel.

One difference is that the oil drillers will be trying to penetrate limestone, not shale, which is much less dense.

Rob Reynolds, president of Shuler Drilling Co. in El Dorado, said initial costs will be high for companies that want a piece of the action.

“Rocks are more complicated than people think,” Reynolds said. “To give up their contents, it may take a while to figure out how to do it.”

Technology continues to advance, yet even with improved methods, Reynolds said the formation is not guaranteed to lead to an oil boom.

“There is no way to predict the success of this venture,” Reynolds said.

There is plenty of evidence around Smackover and the rest of Union County, near the Louisiana border, of the cycles of the oil business. Oil pumps bob up and down in farm fields while elsewhere abandoned equipment rusts amid high weeds.

Bengal said the most intense leasing is taking place between Magnolia in Columbia County and El Dorado, but the activity stretches into Claiborne and Union parishes in Louisiana and as far west as Miller County and into Texas.

“Much like the Fayetteville Shale (in north-central Arkansas), where people started taking leases in east Arkansas, as far as Woodruff and Cross counties. Those areas were initially thought to be prospective though they turned out not to be,” Bengal said.

Firms involved in buying the leases often are working for oil companies, and neither group is too interested in talking about what they’re up to because of intense competition.

James Fugate, president of Pinebelt Energy Resources Corp. in Fairhope, Ala., said, like Schoeffler, his firm bought leases and the project is now on hold.

“It is certainly large,” Fugate said of the scope of the play. But he could say no more, explaining the work was “a very confidential project.”

Reynolds said his company doesn’t have a direct stake in the play, but the business is well situated if there is a rush to drill.

“You always hope to,” Reynolds said. “It can always develop in a manner different than we had in mind.”

The method of using millions of gallons of fluid to fracture rock, known as hydraulic fracturing or fracking, has caused environmental concerns over disposal of waste water and possible contamination of drinking water wells. The Oil and Gas Commission has ordered a halt to work at two natural gas wells north of Conway, where fracking is suspected of triggering small earthquakes.

The Sparta Aquifer, which is Union County’s only source of drinking water, is only several hundred feet deep. Bengal said drillers don’t need a water permit as there is no indication the drilling would impact the aquifer.

The first exploratory well was drilled horizontally, rather than straight down as wells were commonly drilled to reach oil that’s closer to the surface.

“The (horizontal) wells are more costly than a shallow, vertical hole,” Bengal said. But the expense doesn’t mean only very large oil companies, such as Exxon Mobil Corp. or Royal Dutch Shell, are the only ones that could afford to make the investment.

“You can have smaller independents in this type (of exploration),” Bengal said.

Reynolds said there is a significant risk for investors, large or small.

“There’s no substitute for judgment,” he said.

The article 'Oil in Smackover Formation' has been posted on Forbes.com

http://www.forbes.com/feeds/ap/2011/06/13/business-energy-us-smacko...

The following ad was in the El Dorado paper 06/19/11.  Is anyone familiar with this type meeting and what might be discussed?

Brown Dense exploration will occur outside known South Arkansas oil fields, AOGC head says

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Lawrence Bengal

Lawrence Bengal, director of the Arkansas Oil and Gas Commission, speaks Wednesday during a public meeting at the Magnolia Junior High School Auditorium.

 

Posted: Thursday, July 7, 2011 3:20 am | Updated: 3:34 am, Thu Jul 7, 2011.

Brown Dense exploration will occur outside known South Arkansas oil... Mike McNeill, publisher and editor magnoliareporter.com | 0 comments

South Arkansas landowners who may be unaccustomed to dealing with companies that want to lease or drill on their land for oil should arm themselves with information, Lawrence Bengal told about 50 people in Magnolia on Wednesday night.

Bengal, director of the Arkansas Oil and Gas Commission, spoke to area residents during a public meeting at the Magnolia Junior High School Auditorium. It was the second of two meetings the commission set in South Arkansas to familiarize landowners with the leasing process. CLICK HERE to read magnoliareporter.com's exclusive report on the June 23 meeting in El Dorado.

Land leasing for drilling activity has become relevant because of oil company interest in the Lower Smackover Brown Dense, a rock formation approximately 10,000 feet below South Arkansas. During the June meeting in El Dorado, commission member Mike Davis of Magnolia said exploration was in an "embryotic" stage. Only after oil companies spend millions of dollars for test wells and core samples, and production data and research, will it be known if there are recoverable amounts of oil in the Brown Dense. There is no guarantee, Davis told the El Dorado audience.

On Wednesday, Bengal said the commission was on a mission to help the public understand what's going on.

"The Brown Dense, to date, has not produced (oil)," Bengal said.

Two test wells have been drilled. "One test well has produced some oil. We are early on in the development of the Brown Dense. We are now in the leasing phase," Bengal said.

"South Arkansas, unlike the Fayetteville Shale, is not unaccustomed to leasing. But the Brown Dense is going to be a little bit different in that the potential for production will occur outside the historical producing fields," Bengal said.

"Our goal is to get ahead of the curve and provide as much information as possible," he said.

Shane Khoury, deputy director and general counsel, and Alan York, assistant general counsel for the commission, took about 30 minutes to walk through the duties and responsibilities of the commission, and to clarify language typically found in leases that property owners are asked to sign.

The commission does not have the authority to help landowners negotiate leases or to interpret leases. They emphasized that landowners should negotiate agreeable terms with oil companies, or employ an attorney to do so.

They also went into detail about the concept of integration - or what happens when an individual landowner refuses to accept an agreement or to negotiate at all. Since there may be many parties who want to see a well drill and oil produced, landowners who don't consent are viewed legally as failing to provide an oil company with surface rights - or the right to come on a landowner's property to drill. The landowner will still receive the same lease and royalty payments as other landowners.

There were few questions from the Magnolia audience.

One dealt with the controversial process of "fracking." This involves pumping water and other fluids at high pressure into a rock formation with the goal of shattering the rock, thus releasing the oil within. Many people believe that this process contaminates, or has the potential to contaminate, water supplies.

A woman in the audience said that she wanted to negotiate a lease that would prohibit a drilling from fracking under her land.

"We're talking about a formation that's going to be 9,000 to 10,000 feet below the surface. It's going to be at least 7,000 to 8,000 feet or more from the fresh water. I don't believe that there's any chance that a horizontal frac at 9,000 feet is going to contaminate the fresh water at 800 feet," Davis said.

Aside from that, the wells are encased and have multiple packing systems.

York said that fracking is so widely accepted within the industry that development of the Brown Dense would not be possible without it.

Chad White of Magnolia, chairman of the commission, also spoke briefly. 

 

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Smackover vertical well of interest

Be sure to read comments in Exhibit 6

http://www.aogc2.state.ar.us/Hearing%20Applications%20Archive/2011/...

How can I verify ownership of mineral rights in Union County, Arkansas?

Bary West

Greetings all, I have land/minerals in Union county between Smackover and Mt. Holly on what is known as the Silverhill loop. I have never leased this. Is it not in the right area for oil? thanks Roger

Roger, I went to school at MT Holly and know your area.  I do not know if the brown dense leasing has gone that far north or not.  There were reports of leasing up to Mt Holly, east to Libson, and farther east along Mt Holly road north of the airport and including the airport.  Except for this area, the leasing has been south of hwy 82. 

Happy Holidays, Jim

Is thereany new info on SWE renewing leases this year for the South Union County or Union County area?  My leases come up for renewal in May and Dec, 2014.  Any rumors or opinions?

Jim Burgess