By TED GRIGGS
Two energy companies announced plans this week to drill or complete four horizontal wells in the Tuscaloosa Marine Shale, an oil-rich formation that straddles the middle of Louisiana.
A third independent, Amelia Resources LLC of The Woodlands, Texas, has signed a deal with an unnamed partner to help develop the more than 110,000 acres Amelia has under lease.
Devon Energy officials said Wednesday the Oklahoma City-based company has leased around 250,000 acres in the shale. Devon plans to drill two wells in the formation this year, the first of them this quarter.
On Thursday, Dallas-based Denbury Resources announced a joint venture with an unnamed partner that will complete one well and drill another at no cost to Denbury. In late 2009, Denbury acquired Encore Acquisition Co., which had drilled some wells in the shale.
In a news release, Denbury Chief Executive Officer Phil Rykhoek said the company will retain a small interest in future activities in the shale.
“We continue on our oil-focused program and expect many good things in the near future,” he said.
LSU researchers have estimated the Tuscaloosa Marine Shale holds 7 billion barrels of oil.
During Wednesday’s conference call with stock analysts and investors, Devon Executive Vice President of Exploration and Production David Hager said the formation lies 11,000 to 14,000 feet underground and is 200 feet to 400 feet thick.
Hager said Devon believes it can use fracturing technology — pumping in water, sand and chemicals to crack the shale — to increase production in the formation.
The state plans to hold a hearing, possibly by next month, on whether to approve Devon’s request to use hydraulic fracturing for a well near Ethel in East Feliciana Parish. “Fracking” has drawn criticism from environmentalists who say the process contaminates the water supply and places a heavy burden on the resource. The oil and gas industry says those claims are inaccurate.
Hager said vertical wells drilled in the formation had initial production rates of 300 barrels per day.
The three or four horizontal wells drilled in the shale three years ago, which were shorter than Devon plans to drill, tested at rates of up to 500 barrels per day, Hager said.
Those are all reasons for encouragement, Hager said. But Devon needs to get more information on the oil play, including whether the formation can be fractured, and there are risks associated with Devon’s investment.
Still, the company has spent less than $50 million on its leases, and if Devon is successful the company “can create an awful lot of value,” he said.
Kirk Barrel, president of Amelia Resources, said drilling a longer horizontal segment, or lateral, exposes the wellbore to as much rock as possible, and that means the well can produce more oil.
Barrel, author of a blog on the Tuscaloosa Marine Shale, said one of Encore’s wells was drilled horizontally out to 4,100 feet; a typical horizontal section is 4,000 to 5,000 feet long.
However, in the two wells it fractured, Encore only did three stages, Barrel said. Devon’s plans show the company plans to do 13- to 15-stage fracks, which in theory should substantially increase production.
In the south Texas Eagle Ford Shale, “a distant cousin” geologically of the Tuscaloosa Marine Shale, some drilling companies have done 20-stage fracks, Barrel said. In North Dakota’s Baaken Shale, some wells have had 40-stage fracks.
Matt Ross, a spokesman for the Louisiana Oil and Gas Association, said in multistage fracturing, the initial fracturing is done around the point where a well levels out horizontally.
The subsequent fracks are spaced throughout the rest of the horizontal section, Ross said. The spacing depends on the drilling company’s preference.
Meanwhile, Barrel said his firm has placed a significant amount of acreage with an unnamed partner.
Barrel said he could not disclose how much acreage Amelia now has under lease; in February that was more than 110,000 acres.
Amelia is still in the process of adding to its acreage, Barrel said, and he did not know when the partnership might begin drilling.