Oil & Gas Pro

PETROHAWK UNIT APPLICATION TO DISSOLVE AND REFORM HA DRILLING UNITS TO ADDRESS FAULT

For those members concerned with faults in the area of their minerals, this is a good example of how an operator will attempt to configure drilling units so that development may go forward.  IMO, any concern for the unit size in excess of 640 acres should be offset by the ability to drill economic length laterals without having to drill through a fault.  As much as this makes sense to those who understand the basics of drilling HS, the Office of Conservation has not seemed inclined to approve this type of reconfiguration.  IMO, mineral owners in the vicinity of faults should support the efforts of operators to draw units that make geological sense, encourage development and provide for more successful completions and production.

 

http://assets.dnr.la.gov/cons/hearings/2011/02FEB/11-79-81ap0001.pdf

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landownerPermalink Reply by Joe Aldridge on January 23, 2011 at 11:34
Skip, I think the answer is Subjective Data vs Objective Data. In the case of seismic data it would be considered subjective and open to interpretation. Objective Data would be data obtained by drilling. I don't think Louisiana Mineral Law allows subjective data to be considered because it is an opinion not hard data. When the units are setup and originally drilled they are "Geographic Units". They are defined be surface bounds and measurements, a 640 acre section is an example. After the the field is developed, drilled out, then the field is "field unitized" and this is done from the geologic stand point. At that point everyone in the field gets paid on their proportionate share of formation found under their property. That would probably be the reason for the vertical well in addition to showing the true position of the fault.

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 23, 2011 at 11:48
Joe, the proprietary field maps that I have reviewed seem to agree on fault location with those made public by operators particularly Petrohawk's HA and BO contour maps.  And a number of vertical HA wells by operators capable of horizontal drilling are located in unit sections where the maps show fault locations.  IYO. what would be the source of the data that allows the represented faults to be plotted?  And how accurate are the map locations likely to be?

landownerPermalink Reply by Joe Aldridge on January 23, 2011 at 12:40
Its been my observation that the Commission goes with the E&P company's drill data unless someone can show that its wrong. That data will be expected to show the commission where the faults are, the thickness of the formation and formation location as defined by drilling. Its kind of like the instant replay in football. If there is a glaring error by the company and what they are asking for then the Commission will rule on its own data or take an opposing presentation and use it or not rule at all until more data is available. How accurate is it? Its accurate enough if they rule on it for it basically to become law as far as how the field is defined, produced and the royalties paid. Almost always there will be someone that feels they were shafted.

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 23, 2011 at 12:44
Then the only way to confirm the presence, location and throw of a fault to the satisfaction of the Commissioner is to drill through it on both sides?

landownerPermalink Reply by Joe Aldridge on January 23, 2011 at 13:00

No, they simply drilled through the fault and it will show what is called a "Missing Section" on the log. That will define the location of the fault at that point and the throw of it.

 

Skip, this is almost IMing. Love it.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 23, 2011 at 14:44
I'm glad your enjoying yourself, Joe. LOL! However your answers are falling a little short of the mark or I'm just not understanding.  If the Commissioner requires drill data, how is it generated in the case of a fault?  Is the "missing section' of the log part of a vertical, horizontal or directional well bore?  Do operators have to drill an exploratory well bore designed to define the fault for purposes of convincing the Commissioner of its existence and precise location?  There are a number of regs and traditional protocols that are not germane in an era of horizontal drilling of unconventional reservoirs.  Avoiding faults when punching vertical holes is simple compared to laying out multiple horizontal laterals to effectively drain a section.

landownerPermalink Reply by Joe Aldridge on January 23, 2011 at 15:26

I understand what you are saying. The missing section will show in a vertical well. I'm not sure what the protocol is for horizontal wells other than to first drill a vertical hole to get the formation thickness, etc. then kick out and do the horizontal leg. That seems to be what Nelson did in the Austin Chalk well in North Bayou Jack. 

This would be a very good question for an engineer at one the seminars.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 23, 2011 at 16:06

Joe, owing to the fact that I will not be attending any seminars in the near future, I'd appreciate your posing the question if you get the chance.  This seems to me to be an issue that should have been addressed by now.  The Commissioner has amended regs in the past in recognition that Haynesville Shale development benefits from some flexibility.  His "Exemption of Haynesville Zone units from production test requirement" in August of '08 being a good example.

 

http://dnr.louisiana.gov/assets/docs/JHW-hsmemo-20080819.pdf


landownerPermalink Reply by Joe Aldridge on January 24, 2011 at 2:07
What this document shows me is that the HA is so extensive that if he continued to require "production test" before unitization  then there would be cutoff units between segments of the HA. It simply allows the orderly and contiguous development of the HA. We ran into this problem when they tried to connect the Port Hudson and the Irene Fields during the development of the Tuscaloosa in this area. I put in an objection before the Commission at the hearing because Exxon wanted to make our units 20% larger than the other units in either field in their attempt to connect the two fields. My question was, "Is the well in my unit going to produce 20% more that the wells in the other units." The Commission redrew the units that had been applied for and made them all 640 acres in size. we had some pretty weired shapes but they were all 640 acres in size. The Commission can be innovative at times and try to head off problems that they see will be a problem in the future as the field develops. However, I don't see anything in the future that shows that the Commission will accept seismic data to set field limits. I think that would take an act of the Legislature to do that and that probably won't happen.

landownerPermalink Reply by Joe Aldridge on January 24, 2011 at 2:57
Jay, Public Data or not has nothing to do with it. A Company can release any data that it has collected at any time and present it or make it public. Its their data. The State will not allow Subjective Data (Seismic) to be used in setting field definations - PERIOD. The Commission has to use REAL Data (DRILLING DATA - logs, etc.) to define and set geologic field limits.

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 24, 2011 at 3:13
Is the problem that the seismic can not sufficiently define the parameters of the fault or that it is proprietary data?  Lacking some other reasonable means to establish the facts, if seismic was an acceptable means could a company with rights to the seismic data choose to make public the limited portion pertinent to a fault location as part of an application to redraw unit boundaries?

Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on January 24, 2011 at 3:26
Joe, IYO is there a statutory prohibition  on the State allowing subjective data in general, or seismic in particular, or is the situation that the DNR/LOC has never done so previously?  Just as they had not previously waived the field test requirement for unitization addressed in the commissioner's order I posted.

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