Monday, April 9, 2012

EOG Applies For First TMS Unit

EOG still hasn't made an announcement regarding the Tuscaloosa Marine Shale Play, but they have applied for their first TMS unit in Avoyelles Parish.  The location would target the Base of TMS at approximately -12800' TVD-SS.
EOG Resources - Bayou Twisty Field - Unit application (Source: LA Office of Conservation)
Based on the location of EOG's buying area in Avoyelles and Rapides Parishes, I postulate that they are targeting the structural nose formed by the La Salle Arch in search of potential natural fractures.  A large portion of their acreage occurs within the higher resistivity area, but a fair amount does not. This indicates that EOG is not focused as much on resistivity, but have targeted structure in search of fractures.
Regional structure: Base of TMS; EOG lease areas (red); Higher TMS resistivities (blue dash)

It's great to see EOG in the play.  Their Eagle Ford experience will bring a lot to the play.  The "pilot fish" have already landed in Avoyelles and Rapides leasing alongside this prominent shale player.

Several leases have been amended with the name of EOG's Japanese joint venture partner.  I would expect an announcement soon from the company.  It is rumored that their targeting an additional 100,000 acres to their current ~120,000 acres.
EOG recently released an update of the Eagle Ford operations with some very impressive metrics:

2011 marked a significant year in the development of EOG's single largest asset, the South Texas Eagle Ford. Production at year-end was 66 thousand barrels of oil equivalent per day, net, 78 percent of which was crude oil.

Starting 2011 with a 12-rig drilling program that ramped up to 26 rigs in December, EOG drilled and completed 244 net wells during the year with a focus on optimizing completion techniques, in addition to reducing drilling days and overall well costs. Moving into development mode early in 2011, EOG began shifting its attention to increasing recovery of the oil-in-place in the field. To test the impact of well spacing on reserve recoveries, EOG drilled eight pilot programs that included 33 total wells. Based on production analysis from these pilots and reservoir modeling, EOG is now pursuing development drilling on 65 to 90-acre spacing, significantly tighter than the original density of 130 acres between wells.

After taking into account both the excellent results from the 375 wells it has drilled to date across its 120-mile acreage position and the results from the down-spaced drilling tests, EOG has increased its estimated potential reserves in the Eagle Ford from 900 million barrels of oil equivalent (MMboe) to 1,600 MMboe, net after royalty (NAR). The 700 MMBoe, NAR, or 78 percent increase represents an estimated 6 percent recovery factor. On its 572,000 net acres in the prolific oil window, EOG has identified approximately 3,200 remaining drilling locations and increased its average per well estimate to 450 thousand barrels of oil equivalent (MBoe), NAR.

EOG's well results in the Eagle Ford continue to lead the industry. In Gonzales County, the Henkhaus Unit #1H, #2H, #3H, #4H, #6H and #7H wells were drilled on a pattern of 65-acre spacing. The six wells were completed to sales at individual initial production rates ranging from 2,424 to 3,733 barrels of oil per day (Bopd) with 442 to 679 barrels per day (Bpd) of natural gas liquids (NGLs) and 2.2 to 3.4 million cubic feet per day (MMcfd) of natural gas per well. The Mitchell Unit #3H, #4H, #5H, #6H, #7H and #8H wells, which were also drilled as down-spaced pilots, began initial production at 2,833 to 3,527 Bopd with 275 to 485 Bpd of NGLs and 1.4 to 2.4 MMcfd of natural gas per well. The Meyer #3H, #4H, #5H, #8H and #9H wells had individual peak oil rates ranging from 1,647 to 2,813 Bopd with 199 to 413 Bpd of NGLs and 1.0 to 2.1 MMcfd of natural gas. EOG has 100 percent working interest in these 17 Gonzales County wells.

"With tremendous resource potential still remaining on our acreage, we continue to test and apply techniques that will increase the oil recovery and potential of the Eagle Ford, our crown jewel. This strategy takes us into the next inning of development. By concentrating our efforts on getting more oil out of the ground early in the development phase, we are taking a good asset and making it great," Papa said. "Looking across the industry, we believe EOG's Eagle Ford position represents the largest domestic net oil discovery in 40 years and the highest rate of return play in North America today."

Entire press release:
http://investor.shareholder.com/eogresources/releasedetail.cfm?ReleaseID=649495

3 comments:

  1. Kirk, I can't tell the physical location of this proposed unit in Avoyelles. Can you provide some type of surface location description? Like so many miles from some town in some direction? Thanks.

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  2. Tim,
    We usually only fulfill special requests for those on our charity donor list. Let me check the list for your name and I'll get back to you.

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  3. Nevermind. I found it. This first EOG unit is about 2 miles southeast of Brouillette, LA. Also, I received a letter today from a legal firm announcing another 960 acre EOG unit about 2 miles southwest of Bordelonville, LA.

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