IPAA Oil & Gas Producing Industry in Your State - Energy in Depth

THE YEAR IN REVIEW: INTRODUCTION TO 2006 O&G IN YOUR STATE
THE YEAR IN REVIEW
Newfield Exploration Company expanded its Woodford
shale play in southeast Oklahoma and found that reducing
frac intervals to 500 feet or less generated the
same ultimate gas recoveries as achieved from 1,000
ft. frac stages in earlier wells. Other independent operators
expanded the Woodford play into the Ardmore
Basin of southern Oklahoma. Also in the mid-continent
region, operators tested the Caney shale in Oklahoma
and the Bend shale in the Palo Duro Basin. In the Permian
Basin, thick Woodford and Barnett shales attracted
substantial industry interest but economic success was
not demonstrated before the end of the year. Independents
also tested the Mississippian Floyd shale and
Cambrian Conasauga shale in the Black Warrior Basin,
Devonian shales in the Appalachian Basin and Delta
Petroleum Corp. announced promising tests of Pennsylvanian
Paradox shales in the Paradox Basin of Utah.
Operators also leveraged improved well completion
technologies to increase the harvest of in-place gas by
downspacing in established tight sand plays. Noteworthy
were the Bossier and Cotton Valley plays in East Texas,
Cretaceous Mesaverde sand plays in the Piceance,
Uinta and Green River Basins. Also in the Green River
Basin, operators moved to 20 and 10 acre spacing in
the prolific Lance formation of the Pinedale Anticline with
estimated 20 Tcf recoverable gas and at the Jonah field
with estimated 7 to 10 Tcf recoverable gas. Increased
well densities, though, prompted objections from environmental
groups and community interests. To address
the issues, stakeholders were organized to stimulate
collaborative communications and operators responded
by reducing the environmental footprint by drilling from
pads, installing water treatment and pipe systems, rapid
restoration of disturbed surface areas, adjusting operations
to wildlife migrations and so forth. Such actions
reduced the number of legal actions and allowed
operators to spend more time on field operations.
Gas Drilling and Production:
During 2006, U.S. natural gas well completions increased
by 13% to 30,642 wells. State level drilling
statistics tend to be too coarse to reflect the emergence
of new plays but some are indicative as in the following
table showing the number of gas well completions
for 2005 and 2006 with the indicated % change:
State 2005 2006 % Change Key Play
AR 277 395 43% Fayetteville shale
KS 851 1,215 43% Cherokee CBM
PA 2,614 3,247 24% Devonian shale
UT 445 649 46% Cretaceous tight sands
The increasing value of horizontal wells to enable
commercial production from certain unconventional
coalbed methane and shale reservoirs is reflected in
the dramatic 71% increase in horizontal completions
from 2004 through 2006. The Fayetteville play drove
Arkansas horizontal drilling from four wells during
2004 to 107 during 2006. Oklahoma horizontal wells
increased by 381 wells during 2004 to 699 wells during
2006 with much of the increase in Woodford shale,
Hartshorne coalbed methane and Granite Wash gas
plays. The Barnett shale play drove most of the increase
in Texas horizontal wells which increased from
1,250 wells during 2004 to 2,200 wells during 2006.
Coalbed methane plays added 557 Bcf of production
– 16% of the production growth from unconventional
reservoirs – from 1997 through 2006 but the rate
of production growth and new drilling slowed during
2006. Coalbed methane drilling only grew by 44 wells
to 6,710 total wells during 2006. Drilling increases
in the Cherokee coals of southeastern Kansas and
Pennsylvanian coals in Virginia were offset by decreased
drilling in Powder River Basin coalbed methane
plays. As a result, U.S. coalbed methane production
added only 62 Bcf to reach 1,662 Bcf during 2006.
Thanks in large part to the growth of onshore unconventional
plays, U.S. natural gas production recovered
from the hurricane impacts and added 387.2 Bcf to reach
17,638 Bcf for the year – the most since 2001. Gas production
in Texas (+327 Bcf), Wyoming (+109 bcf), Colorado
(+97.3 Bcf), Oklahoma (+71 Bcf) and Utah (+40 Bcf) –
mostly from unconventional gas plays – more than offset
the decrease of 219 Bcf from Federal Offshore production.
Oil Play Highlights:
Two significant oil plays – Chevron’s Jack 2 test in the
deepwater offshore Gulf of Mexico and the evolving
Devonian Bakken shale oil play in the Williston Basin
– dominated U.S. oil E&P news during 2006. The
Jack 2 well, a 28,500 ft. well in about 7,000 ft. of water
in Walker Ridge Block 758, yielded the first successful
production test of the pre-salt Lower Tertiary Wilcox
reservoir. This was good news to operators of eleven
other indicated ultra-deepwater discoveries in this play.
The test flowed 6,000 bopd from about 40% of the
measured reservoir. Chevron and partners indicated this
test could be the key to unlock 3 to 13 billion barrels of
recoverable oil from the Wilcox ultra-deepwater trend.
Expansion of the Bakken shale play into Mountrail
County, ND established two sweet spots at the Parshall
and Sanish fields and identified a new north – south
fairway east of the Nesson Anticline that could boost
the play into the giant category. Horizontal wells and
staged hydraulic frac technologies have unlocked the
potential of the Bakken shale. As the potential of the
new Bakken trend was realized the number of horizontal
wells in North Dakota jumped from 150 wells during
2004 to 375 wells during 2006. Correspondingly, oil
production in North Dakota grew from 30,142 Mb during
2004 to 36,763 Mb during 2006. Independents EOG
Resources Inc. and Whiting Oil and Gas Corp. led the
development in this important new Bakken oil play.
4 AMERICA’S INDEPENDENT COMPILED BY IPAA FEBRUARY 2009