Tuesday, March 23, 2021

Austin Chalk Update

It's been a quiet year in the oil patch other than bankruptcies and layoffs.  I'm glad to have some activity to report on. 

White River Operating has released the initial potential on the Deshotels 24H-1. SONRIS reports the following for the well:

3/11/2021, 1057 BOPD, 627 MCFD, 1248 BWPD; 1884 FTP; 4100 SITP; 780 CP; 20/64 CK; 593 GOR; 39.1 GRVTY; PERFS OPEN HOLE COMPLETION (15150-18892' )

Congratulations to the White River, Blackbrush, and Gage teams.  The well was completed with an open hole completion and no hydraulic fracturing (frac) job.  This approach is much cheaper than the recent frac'd Austin Chalk wells by EOG, ConocoPhillips, Marathon, and Prime Rock. Lower costs will assist the economic viability of the project. 

I was involved with a 3D acquisition and drilling project in this area back in the 2009-11 timeframe (3D map below).  The project, Turner Bayou, originally focused on shallow gas amplitudes.  A small public Australian company, Pryme Energy, funded the large majority of the project.  

After the shallow assessment, we performed an interpretation on the Austin Chalk interval.  Seismic processing and coherence attributes revealed a strike-trending fracture fairway (map below).  In addition, the seismic anomaly covered the area of the Moncrief Martin B-1 which was drilled in 1978.  This vertical Austin Chalk completion has produced 582,000 barrels of oil and 587 million cubic feet of gas.  It clearly was connected to a fracture swarm and was the key variable leading to the drilling of our Austin Chalk wells.  

In parallel in 2010-11, Anadarko was assembling a 250,000 acre block from the Texas state line to Pointe Coupee Parish.  Anadarko was having great success at the Texas/Louisiana border. A South Korean operator, Atinum, was also drilling in the area. None of the wells were being frac'd.  Our group of very small players along with Pryme Energy and with Nelson Energy as operator drilled the Deshotels 13H-1 and 20H-1.  Both wells drilled successfully and had tremendous natural fracturing and associated gas shows.  There was great anticipation on the completions of both wells.  Unfortunately, the results were very disappointing. Many theories have been made over the years since, but the production results and the fractures/shows didn't align.  All believed that the completions failed to keep access open to the fracture network 

We had a lease in Anadarko's Rabalais unit to the northeast and participated in that well even though the coherence maps didn't reveal any anomaly or fractures.  That well had the quietest mudlog that I've ever seen in my entire career.....zero fractures and zero gas.  It seemed to prove that the coherency anomalies aligned with the presence of fractures.  Some of our group went on to drill the Rosewood Plantation 21H-1 which had many challenges.  Meanwhile, Anadarko and Atinum struggled right along side us. By 2013, all players "cut bait" and another Chalk Era had ended.

I've posted numerous slides below, many of which are still online from Pryme Energy's many "overhyped" press releases.  The links will present many of the long "tales" of capital destruction.  I've also posted some links on White River and its holding companies.  Ecoark is a bizarre mix of ventures.

As always with the Austin Chalk, the water will be important to monitor over the months ahead.  Saltwater disposal wells add a significant amount to the cost structure and negatively impact economics.  In a future post, I will compare the frac vs open hole completions. I question whether the recent frac results justify the extra costs.  Is the frac only accessing more water?

Let's hope that oil stays above $60 and generates some activity and stability in the industry and region.  This layoff cycle has likely exceeded the one in the mid-80's.  Much talent has left the industry for good unfortunately.