Sunday, January 27, 2013

Devon Energy - A TMS Post-Analysis

Over the past year, there have been many discussions regarding Devon's frac design on their TMS wells.  I commend them for being the "TMS leasing pioneer", but their operational approach has generated many questions.  With many rumors circulating regarding their status in the play, it might be a good time to perform some post-analysis.

I believe that their results can be directly correlated to the landing zone of the laterals and the amount of proppant pumped.  The log below displays the Passey Log Method where the deep induction and sonic logs separate with increasing TOC.  Across the play, the target zone typically appears 30-70' above the base of the TMS.  The wells with the best initial potentials in the play so far (Encana's Anderson 17h/18h), landed in this zone quite well.  Devon's initial wells (Beech Grove, Soterra) landed very high in the section likely due to the fact that they believed that the water bearing sands below could be an issue.  Their next four wells targeted very low in the section.  These wells should disprove the theory that the water bearing sands below are an issue.  None of their six wells landed in the highest TOC section of the TMS.  The minimal proppant levels make the probability of achieving an economic well even more unlikely.  The Richland Farms 74H-1 was the closest to the target zone and when you compare the IP30 to the 91,600 #/stage pumped, this well exhibits the most efficient, economic result.  It would be interesting to see this well offset with a higher landing target and 450,000 #/stage of proppant.  I envision 1200+ boepd.


1 comment:

  1. Kirk:

    Thanks for providing this detailed analysis that helps explain the dismal results achieved by Devon. I know mineral owners and the industry has been very frustrated that Devon’s efforts have done little to prove up the commerciality of the TMS.

    A reasonable person would have thought that Devon’s personnel over the TMS would have done a much better job of “sampling and producing” the formation, especially with each successive well they drilled.

    While I am sure several factors can be debated, the one very compelling factor (volume of proppant used) compared to the other operator’s completions is an extremely telling fact about Devon’s performance in the TMS.

    For whatever reason, it strongly appears that Devon fielded a technical team that was not up to the task of pioneering and proving the commerciality of the TMS. I guess that if you can’t even (or are slow) to recognize the significance of increased volume of proppant used by your industry colleges in the TMS, then the idealized landing zone via a Passey Log Method analysis may have also flown right over Devon’s head.

    Sometimes these things just happen and it is hard for a reasonable person to understand how these failures occur but they do (just ask almighty BP about the Gulf). Technical people, albeit very intelligent, do make mistakes like everyone else, especially in a “pioneering situation”.

    Unfortunately,it does not appear that Devon is very interested in trying to correct their previous failures by mounting a better effort.
    One must now hope that EOG, EnCana, Halcon, Goodrich and (hopefully new additional skilled operator entrants into the TMS), will continue on with increasing success to prove up the commerciality of the TMS to the world.

    You have a very long and extensive technical background in the Tuscaloosa Formation. I hope the elites of the industry are not too proud to harness the asset, one such as yourself, brings to the table.

    Thanks again for sharing with all involved in the TMS, your deep insight into these technical matters.

    Sincerely, ~ ~ John Parker

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