Gas from shale

Gas from shale

Companies working hard to squeeze more energy out of area rocks

Producing natural gas from shale — a thin, nonporous rock — is the newest wrinkle at some of Oklahoma’s biggest energy companies and a source of energy some say could be vital to meeting U.S. demand.

Encouraged by the explosive growth of natural gas production in North Texas’ Barnett Shale, Chesapeake Energy Corp. and Devon Energy Corp. have entered new shale plays in Oklahoma and Arkansas.

The Caney, the Woodford and the Fayetteville — shale formations known to have large deposits of gas — could be as prolific as the Barnett Shale, geologists and industry officials contend. The Barnett now produces about 1.2 billion cubic feet of gas a day, and production is sure to grow as producers acquire thousands of undeveloped acreage in this celebrated field.

The Caney Shale in southeast Oklahoma and the Fayetteville Shale in north central Arkansas are extensions of the Barnett Shale, said Charles Mankin, head of the Oklahoma Geological Survey.

“It’s the same rock unit,” Mankin said. “It’s just a different name.”

Officials have no hard estimates of reserves in these unconventional plays
because exploration and drilling has just begun. But the industry is optimistic.

“Caney is just starting to be explored,” Mankin said. “The properties of the rock are a little bit different, but I think it’s going to be about as productive as the Barnett.”

Thousands of acres in the Caney and the Woodford shale plays, which cover about eight counties in southeast Oklahoma, have recently been acquired by Devon, Chesapeake and Houston-based Newfield Resources.

Oklahoma City-based Devon has bought the rights to lease nearly 90,000 acres in the Woodford-Caney, although most of Devon’s drilling activity is in the Woodford.

“It will be another area of growth for us,” said Devon Chairman Larry Nichols.

Newfield, which employs 125 people in Tulsa, has 110,000 acres in the Woodford and plans to drill 75 wells in the play this year.

“The industry has known for years that the Woodford Shale was productive, but it took a certain gas price to make it economic,” said Steve Campbell, Newfield’s vice president of investor relations.

Production from a typical Woodford well is expected to surpass the output of a typical Barnett well, Newfield said. Based on the production of wells Newfield has drilled so far, a Woodford well can recover on average 2.75 billion cubic feet of gas. That compares to 2 bcf for a typical Barnett well.

“The wells we have produce measurably better than the Barnett,” said Sam Langford, who oversees Newfield’s midcontinet operations.

Devon, the largest producer in the Barnett, pioneered the production techniques now used in the Barnett and other shale plays. Newfield targeted the Woodford, hoping to duplicate Devon’s success.

“They made tremendous strides in getting the cost down in the Barnett,” Langford said of Devon. “They made that play very economic.”

Devon also has high hopes for the Woodford, with plans to drill 24 wells this year.

“Woodford is where the action is,” said Devon spokesman Chip Minty. “We’ve taken what we’ve learned in North Texas and we’re applying those lessons to shale formations in eastern Oklahoma.”

The average cost of drilling and completing a horizontal well in the Woodford is about $3 million, according to Devon. It plans to spend $79 million this year to develop the play.

To produce gas from shale, the rock is fractured by pumping sand and water under high pressure into the formation. The fractures unlock the trapped gas, creating channels for the gas to move through.

Woodford shale is easy to fracture because it’s highly brittle, which enhances production, Langford said.

“It has a higher silica content,” he said. “Silica is the primary constituent in glass, and it’s easy to break glass.”

Newfield plans to have 10 rigs searching the Woodford by the end of the year. If the results are fruitful, the company may intensify its drilling program.

“We’re asking ourselves, ‘Can we go from a 10-rig program to a 20-rig program,’ ” Campbell said.

An expansion of that size would lead to a “significant increase” in jobs at Newfield’s Tulsa office, Campbell said.

“It will add value to the Tulsa community,” he said.

The Fayetteville Shale, a red-hot gas play covering 13 Arkansas counties between Fort Smith, Ark., and Memphis, Tenn., is another new field that could rival the Barnett, experts and industry officials say.

Oklahoma City-based Chesapeake said it plans to spend $100 million this year to evaluate and develop the Fayetteville.

“It’s got tremendous potential because it’s so large,” said Chesapeake spokesman Tom Price. “It’s potentially 150 miles across.”

Of the 1.1 million acres Chesapeake has purchased in the Fayetteville field, 300,000 acres are commercial quality, Price said. The company said it could drill up to 4,600 wells, each producing more than 1.5 billion cubic feet of gas.

“We’ve got three rigs going now,” Price said. “We have drilled between 15 and 20 wells.”

Shale gas will become an increasingly important source of energy as domestic gas supplies wane amid strong demand, geologists and industry officials say.

“That’s the available resource that’s left in the U.S.,” Campbell said. “Our traditional basins are more mature, so we’re looking at things that are harder to see seismically, that are in deeper water, that are in tighter reservoirs, and we’re relying on price and advances in technology to make those plays economic.”


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