Somewhere down the line, someone coined the phrase, “Big oilfields only get bigger.” Now an adage, the observation was made when large oilfields had reached peak production, only to reveal later they had much more to give when new technology was applied.
The Austin Chalk formation, which sits right on top of the Eagle Ford formation, was a hot play in the mid-1900s, mid-1970s and 1990s. However, it was all but forgotten during the shale boom when the Eagle Ford formation took front and center. With the majority of shale plays still on the shelf, the Austin Chalk is back on the radar and stronger than ever, proving a prominent contender in the ever-growing oilfield category.
“Discussing the Austin Chalk again is very much a surprise to us,” said William R. Thomas, chairman and CEO of EOG Resources, Inc., during a recent energy conference.
EOG is one of the largest operators in both the Eagle Ford and Austin Chalk plays.
“We, probably like the rest of the industry, had kind of written off the Austin Chalk,” Thomas said. “But we have discovered a new geologic concept in an existing play in the Eagle Ford. Our team has cracked the code on how to make our particular footprint in the Austin Chalk – a top-tier horizontal play, earning returns on par with the Eagle Ford, Permian and Bakken plays.”
Two of EOG’s wells, the Leonard AC Unit 101H and the Denali Unit 101H, produced an average of 2,175 and 3,130 barrels of oil equivalent per day over 30-day and 20-day periods, respectively. Its Kilimanjaro 101H well produced 675,000 barrels of oil and 1.2 billion cubic feet of gas in just nine months. The wells are located in the Giddings Field – the largest field in the Austin Chalk – in southeast Texas.
Noting that other operators have wells in the Austin Chalk that have produced 300,000 to 400,000 barrels of oil in their first years, David W. Trice, EOG executive vice president of Exploration & Production, called the discoveries “substantial.” “Based on the data we have, we think they are repeatable,” he said in a statement to stakeholders last year.
Other operators think so as well. Companies including EnerVest Ltd., GeoSouthern Energy, Blackbrush Oil & Gas, Gulftex Energy, Marathon Oil Corp. and WildHorse Resource Development have leased thousands of acres in the Giddings Field spanning seven counties, including the prolific Karnes, Fayette, Washington and Gonzales counties, near the state’s capitol.
The Austin Chalk, which extends from Mexico across south and east Texas and into Louisiana, is sourced by the Eagle Ford formation. It was discovered in the 1920s and began significantly producing in the 1950s with vertical wells. Much of the formation is naturally fractured, and vertical wells that happened to tap into those fractures had good shows, explained Duane Wagner, a technical advisor of geology at EnerVest, to Rigzone. However, this was predominantly a hit-or-miss operation.
Having begun his career in the Chalk, Wagner has watched the Giddings Field ebb and flow over the decades as new technology has come onto the scene.
The City of Giddings No. 1 well, drilled in 1961 by Union Producing Company, produced roughly 36,000 barrels of oil from 1961-1972. When it was hydraulically fractured for the first time in 1973 by C.W. “Chuck” Alcorn, Jr., the result was a production spike of more than 500,000 barrels by 1981.
“That was an eye-opener,” Wagner said.
Operators were quick to grab available 2-D seismic data to identify the natural fractures in the formation and began hydraulically fracturing them. Many wells produced several hundred thousand barrels over their lifetimes.
Horizontal drilling was introduced in the Austin Chalk in 1988 and accelerated in the early 1990s, making it much easier for operators to tap into the naturally fractured reservoir.
“It took most of the risk out of drilling in the Chalk,” Wagner said. “It was very much like a sure thing.” From 1990-95, nearly 4,000 wells were drilled in the Giddings Field. Today, EnerVest operates nearly 1,100 of them.
It wasn’t too long before operators discovered that the horizontal wells produced even more hydrocarbons when mildly stimulated with water and sand. The Austin Chalk was simply a phenomenal play.
Whatever excitement it had generated, though, the Chalk was quickly erased by the shale boom. The combination of horizontal wells, multi-stage drilling completions and hydraulic fracturing became the golden ticket for extracting oil from source rocks in the Eagle Ford, Bakken and Marcellus formations, doubling the United States’ oil production to 9.5 million barrels a day from 2011 to 2015.
The Austin Chalk was cast aside – until oil prices dropped to $30 a barrel and shale plays were no longer economical.
A handful of operators in the Eagle Ford needed to bide their time and hold their leases, so they took advantage of the double-stacked play roughly two years ago and began drilling in the Chalk with the same rigs, crews and technology they had used in the Eagle Ford. With many service companies offering a 30 percent discount and Chalk wells not requiring near the drilling depth, drilling in the Chalk was economically feasible and, to some, worth the gamble.
Many areas of the Austin Chalk that were once undesirable because of low porosity and low permeability have become sweet spots today.
Karnes County and areas outside the naturally-fractured fairway in Giddings County are very similar to the Niobrara play in Colorado’s DJ Basin, requiring that they be treated as a shale play, using multi-stage, high density stimulation. After such treatment, production from EnerVest Austin Chalk wells in Karnes County produce 250,000 to 300,000 barrels of oil in their first year, with ultimate recoveries of up to 1 million barrels of oil equivalent, Wagner said.
“Operators are drilling in areas where they would not have drilled in the ‘90s because these areas had fewer natural fractures,” he said. “But they are completing these wells just like they would in the Eagle Ford and are finding that they are actually more productive. Now you’ve got operators moving all up and down this trend.”
EOG, which has drilled more than 2,000 wells in the Eagle Ford and Austin Chalk formations, has expressed confidence over additional success in the Chalk.
“We’ve delineated what we think is a zone or multiple pay zones,” said Lloyd W. Helms, Jr., EOG executive vice president for Exploration & Production, in a statement. The Austin Chalk “lends itself really well to horizontal drilling and the high-density completions that we are doing in most of our other plays. We’re excited about the potential here.”
To date, the formation has produced 1.7 billion barrels of oil equivalent from roughly 9,500 wells, and it appears that the hydrocarbons will continue to flow.
“These wells are absolutely amazing,” Wagner said. “We are going to see million-barrel wells. This has been a game-changer.”