How is the ”base formation" depth for a depth limitation determined in practice?

Most Depth Limitation Clauses include language such as "..shall expire as to all formations more than 100 feet below the base of the deepest producing formation... etc. etc." But, when the time comes, the key question is, How is the "base formation" depth determined for a specific well? Who makes that determination?

Since the primary term of many Haynesville leases in North Louisiana have now expired, anyone fortunate enough to have a depth limitation clause should find this topic of interest.

Searching the GoHaynesville site for "depth limitation" I found posts advising "you should try to get one in your lease" and asking ”What do you if you think a company is exceeding those limits?”. But nothing about how such clauses are operationalized for a specific lease/well.

Surely Skip Peel or other knowledgeable contributors could shed some light on this for us.

Tags: deepest producing formation, depth limitation, stratigraphic equivalent

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Permalink Reply by vigo on June 10, 2018 at 7:46

Here is the question formulated in terms of my own mineral interest:


My lease has a depth limitation clause that releases "all formations 100 feet below the base of the deepest producing formation". Further, it states that, "in the event the deepest producing formation is from a unitized interval, 'formation' shall have the meaning ascribed to it by" the LOC Unit Order.

My Unit Order defines this interval as "the stratigraphic equivalent" of the "zone encountered between the depths of 11.900 feet and 13,395 feet" of the unit reference well.

The well history for my well on SONRIS indicates:

Measured Depth = 17,101 feet
True Vertical Depth = 13,179 feet.
Haynesville Formation Top = 13,182 feet
Well Producing Interval = 13,775 - 16,942 feet (including lateral distance, not TVD of course)

Which of these depths constitutes "the base of the deepest producing formation" for this well?

I am preparing to request the Lessee file a release of the lower depths and I need to know where I should rightfully expect the depths released to begin.

Permalink Reply by Skip Peel - Mineral Consultant on June 10, 2018 at 11:08

A depth limitation clause may take the form of a horizontal Pugh such as in your case.  I've never run across anyone seeking a release of depths below the Haynesville Shale.  Probably because there are no known productive formations below the Haynesville formation in the shale portion of the basin.  In your particular case I think you could take the TVD, add 100', and give it a shot.  I'm just unsure you have anything to gain but then again I don't know the specific location and only an experienced geologist could provide you with an opinion.  Across much of the Haynesville Shale, the next deepest formation is the Smackover but it is water prone and operators are careful not to have fracks communicate.  The salt water disposal costs are a real drag on the well economics.

Depth limitation clauses that reserve or exempt shallower formations are the more common and do require a reference well in reasonable proximity to the subject mineral tract.  An experienced O&G law firm should be engaged for that type of clause.

Permalink Reply by vigo on June 10, 2018 at 13:49

Thanks for the reply, Skip.

My question resulted from the exploratory calls I and neighboring a landowner (18-10-10 Natchitoches Parish) received a couple of months back about our interest in leasing reserved lower depths. So far there's been no follow-up and I've found little other evidence of such interest, but the O&G attorney I consult recommended it would be prudent to request a release be filed just in case.

He did say a partner in his firm was looking at organizing some lower depth holders in NW LA for shopping around, but it wasn't clear where these holders interests were located or in what stage the effort was.

ALL: Has anyone else in NW LA received inquiries about leasing lower depths?

Permalink Reply by Skip Peel - Mineral Consultant on June 10, 2018 at 14:40

You are on the slope of Natchitoches Island.  Haynesville depths, or deeper, are largely faulted out on the north facing slope as far as I can tell.  If you have an experienced attorney, I suggest that you follow their lead.  But only if they are very experienced  in O&G.

Permalink Reply by vigo on June 11, 2018 at 6:34

"Natchitoches Island" is a new term to me. I've not seen it in the stratigraphic studies I've read.  I see there is a Natchitoches Island Oil Field southeast of Alexandria in Avoyelles Parish. Are you aware of any publicly available stratigraphic studies or maps that would indicate the location and extent of Natchitoches Island and relationship to other features - stratigraphic sequences, etc?

Permalink Reply by Skip Peel - Mineral Consultant on June 11, 2018 at 13:13

There is little published data on Natchitoches Island that I have found.  The basis of what I know comes from elderly geologists and review of historic E&P in that area of far north Natchitoches Parish.  In general that area is considered by many to be the termination of the fairly orderly, down dipping NW LA sequence of geologic formations.  On the south slope begins the south LA stratigraphic sequence.  The interval in between is heavily faulted.

Those familiar with the drive down I-49 south will recall the long stretch of flat terrain that ends in an escarpment at the south side of Bayou Pierre a few miles short of Hwy. 6.  That is the beginning of the visible "top" of the "island".  There is a letter in the SONRIS database from XTO to the Office of Conservation stating that the Haynesville was not encountered, and assumed faulted out, in the vertical wellbore of their Steadman well in north Natchitoches Parish.  That letter is attached for your review.

XTO%20Steadman%20Letter.pdf

Permalink Reply by Skip Peel - Mineral Consultant on June 12, 2018 at 4:01

vigo, try this.  Use the link below to go to the database search page for Wells By Parish.  Select Natchitoches.  There are only 1037 historic wells drilled in the parish.  This is very low in comparison to all the neighboring parishes to the north.  I can show you a couple of north Caddo Parish governmental sections that have more wells than Natchitoches Parish.  Next scroll through the list focusing on the column, Status.  Producing wells are Status Code 10.  There are very few. 

I hope that the new well technologies and designs will make some far NW Natchitoches lands economic.  So never say never, but............there is no remedy for heavy faulting.

Use the link below, click on Conservation, then Well Information and then Well Search By Parish.

http://sonris.com/dataaccess.asp

Permalink Reply by vigo on June 17, 2018 at 10:52

My interests are located off 174 midway between Pleasant Hill and Ajax, where De Soto, Sabine and Natchitoches Parishes tri-corner, roughly 15 miles northwest of the “visible top area” you mentioned.

Thanks for pointing out the XTO letter. When I reviewed the "active and producing" wells in my area, Steadmans was "Waiting on Pipeline". I saw the issues in the drilling detail, but failed to realize it had been plugged and diverted laterally into the James Lime.

Judging from "active producing" Haynesville wells in the area (Semp Russ, Birdwell, Blankenship, Glover and Patterson) it looks like I am 2 - 3 miles northwest of where the strata fault-out on the Natchitoches Island slope. Generally, wells Northwest of the line formed by these five wells are actively producing from the Haynesville between 12,500 and 14,200 feet.

Permalink Reply by Skip Peel - Mineral Consultant on June 17, 2018 at 11:44

I'm not familiar with Glover and Patterson.  Where are they located?

Permalink Reply by vigo on June 17, 2018 at 14:41

Sections 1 (Glover 242523) and 7 (Pattison 244606) T9N R11W.

These were new to me too and I should have read closer.

Pattison (spelled properly, my bad) status is 03 PERMIT EXPIRED - so tells me nothing.

Glover status is 33 SHUT-IN PRODUCTIVE -FUTURE UTILITY - TVD 14,106

COMPLETED 05-22-12; GAS; HAYNESVILLE RA; 16268 MCFD; 48 BWD; 18/64 CHOKE; 2025# CP; 10437# FP; PERF 14475-18105' MD.

So I think my "line" still holds.

Permalink Reply by Craig Cooper on June 16, 2018 at 10:59

Certainly agree with Skip though there is some probability that Smackover could be productive over / around deep-seated salt structures and (an even lower probability that) Norphlet sandstone (below Smackover) could also contain hydrocarbons. The biggest issue with the Norphlet in this area is that its porosity & permeability are likely salt plugged by the underlying LouAnn salt. It thickens & cleans up offshore where Shell has recently made a series of significant discoveries.

As Skip advises, consultation with a geologist / geophysicist possessing recent experience in the basin is a good idea.

Permalink Reply by vigo on June 17, 2018 at 11:32

So far, the best publicly available stratigraphic study I’ve found is “Resource Assessment of the In-Place and Potentially Recoverable Deep Natural Gas Resource of the Onshore Interior Salt Basins, North Central and Northeastern Gulf of Mexico”; Principal Author: Ernest A. Mancini (Department of Geological Sciences, University of Alabama); Issued: November 15, 2006; DOE Award Number: DE-FC26-03NT41875.

It is available for download at
https://digital.library.unt.edu/ark:/67531/metadc887678/

The basis for the LA portion this study is a database of digitized well logs from 11 North-to-South cross sections across Northern LA consisting of 140 wells. The study identifies the tops, bottoms and thicknesses of stratigraphic units from the Upper Cretaceous series downward through the Upper Jurassic, including the Cotton Valley, Haynesville, Smackover and Norphlet Formations.

Although this study was focused was on conventionally recoverable gas, the details reveal much about the strata in the unconventional Haynesville play.

Two interesting interesting details are: (1) the Smackover Formation is the main petroleum
source rock in these basins and subbasins, and (2) thermogenic generation in this source rock continues to the present day.

My layman’s take-away is that there is recoverable hydrocarbon below the Haynesville in our area. The question is, given the current abundance of gas, when will the demand for natural gas and the economics of drilling and development make it a profitable venture.

Looking for information on the Natchitoches Island Salt Dome I found:

Sequence Stratigraphy of the Upper Jurassic Mixed Carbonate/ Siliciclastic Haynesville and Bossier Shale Depositional Systems in East Texas and North Louisiana, by Andrea D. Cicero et. al.,October 2010

https://www.researchgate.net/publication/261591143_Sequence_Stratig...

and

Stratigraphy and Depositional Dynamics of the Haynesville-Bossier Sequence: Inferences from Whole-Rock Elemental Data, by Michael C. Dix et.al., February, 2011

http://www.searchanddiscovery.com/pdfz/documents/2011/10298dix/ndx_...

I am still digesting these.

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