The Tuscaloosa Marine shale play, which covers 2.7 million acres across central Louisiana and southwest Mississippi, could emerge as the next big shale oil play.
Devon Energy first reported in early May its activity in the play, which is similar in geology to the Eagle Ford, and is believed to have the same potential for development and production. Devon holds 250,000 acres in the play; Devon spokesperson Chip Minty said it is still too early to quantify the liquids content of this acreage. The company plans to drill two horizontal wells this year on its Tuscaloosa shale acreage. Last month, Devon spud the Lane 64-1 well, in East Feliciana Parish, La., the first of these two wells, which was drilling at 15,134 feet as of June 14, nearly at total depth.
Devon has requested from the Louisiana Department of Natural Resources' Office of Conservation a permit for a single unit in Ethel Field in East Feliciana parish. Devon requested drilling a vertical well and with the completion of that, proposed to drill horizontally within the unit. The Office of Conservation will review what was presented by Devon at a hearing on June 7 and is expected to make a decision in about a month.
The company's Tuscaloosa activity is part of Devon's goal of identifying and establishing large acreage positions in highly economic plays at reasonable prices. The Tuscaloosa shale on Devon's acreage is approximately 200 to 400 feet thick, at depths of 11,000 to 14,000 feet across its acreage position. Oil production has been established, up dip in the play from the Tuscaloosa Shale, said David Hager, Devon's executive vice president of exploration and production, during Devon's first quarter 2011 earnings conference call. Devon will utilize horizontal drilling and fracture simulation to enhance productivity of the reservoir in the oil and liquids-rich portion of the play.
Devon's Tuscaloosa plans mark the third wave of drilling activity aimed at the Tuscaloosa Marine Shale. The late wildcatter/& geophysical engineer Alfred C. Moore pioneered and led the first focused campaign to produce the formation in 1970, when he sold a proposal to Sun Oil to target the play, said son Clint Moore, who is vice president of corporate development at ION Geophysical Corporation. During the 1950s and 1960s, Moore's father and others documented oil shows on the pits whenever the Marine Tuscaloosa Shale was drilled through, just above the Lower Tuscaloosa sands that he and fellow operators were targeting.
Moore sold his "South Slope Project" three times to successive operators to test the Tuscaloosa Marine Shale's potential from 1970 through 1978. The four vertical wells drilled as a result, failed commercially, due to inadequate frac jobs and resulting low production rates, although operators produced two of the wells for many years. Without horizontal drilling and hydraulic fracturing technology of today, operators were drilling vertical holes and utilizing old single-stage fracturing technology that limited the amount of oil shale thickness that they could perforate and reach.
A 1998 report by Louisiana State University's (LSU) Basin Research Institute, which estimates that the Tuscaloosa Marine Shale play holds unproven, unconventional resources of 7 billion barrels of oil, helped revitalize interest in the Tuscaloosa shale. Developments in horizontal drilling and hydraulic fracturing, which made tapping unconventional oil and gas resources commercially feasible in other oil shale plays, may also increase production of Tuscaloosa Marine shale oil to commercial levels as multiple-stage fracing is expected to help well productivity.
According to the LSU report, the marine shale section lies between sands of the upper and lower Tuscaloosa sections and varies in thickness from 500 feet in southwestern Mississippi to more than 800 feet in the southern part of the Florida Parishes, southeastern Louisiana.
EnCore Energy Partners in 2007 and 2008 drilled four horizontal wells in roughly a ten mile square area targeting the Tuscaloosa Marine Shale Play, with three of those yielding early, fair production rates. In 2009, EnCore was acquired by Denbury Resources. Denbury recently signed a joint venture agreement in which the partner will complete one well and drill another at no cost to Denbury, who will retain a small interest in future activities. According to one blog, EnCana has become operator of EnCore's 4th well, the Board of Education 1H well, which was never completed, and that preparations for a frac job are underway. Denbury holds an estimated 150,000 acres in the play.
While the Tuscaloosa Marine Shale play offers an exciting future, the play's success will come down to whether wells can be fractured to allow production at commercial rates. "We know the oil is there, and leasing has taken off, but if it can't be fractured commercially, it will be another black eye for the trend," said Moore. "I believe our industry now has the ingenuity and ability to develop and produce this oil commercially, and after 40 years of watching the play start and stop, this should be its time. My father always believed these reserves were of national significance, and envisioned 1,000+ producing wells someday from the TMS."
Other companies with interests here include Indigo II Louisiana Operating LLC with 240,000 acres and Amelia Resources with 110,000 acres. On June 13, Goodrich Petroleum announced it ha purchased approximately 74,000 net acres in the Tuscallosa Shale oil trend in Louisiana and Mississippi. The company paid about $13 million, or $175 per net acre for the acreage. Indigo also is testing a section of the Tuscaloosa Marine Shale west of the Mississippi River in Louisiana also known as the Louisiana Eagle Ford shale. Indigo Chairman and Chief Executive Officer Bill Pritchard said he sees potential for Tuscaloosa shale production in the acreage it received from Roy O. Martin Minerals, Louisiana's largest private landowner, in exchange for equity in Indigo.
The company put together about 240,000 acres in central Louisiana, of which half has been leased from timber companies. Indigo drilled the Bentley Lumber 32-1 vertical well, and will drill the Indigo Bentley Lumber 23H-1 horizontal well in July.
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