Oil/gas drilling activity, interest growing in area
ConocoPhillips is making a play in Louisiana’s portion of the Austin Chalk formation, raising the prospect of a resurgence of onshore drilling activity in the state. Some reports claim the the Houston-based oil company’s effort could be focused in the Simmesport area.
In the Bunkie area, people are watching an oil well being drilled in nearby south Rapides Parish, where the BlackBrush oil company has started “fracking” in a well it has drilled there.
If the production from the well is good, it could open the Bunkie area up for more drilling.
In addition to ConocoPhillips’ interest in what lies beneath Avoyelles’ fertile soil, EOG Resources has drilled a test well in the formation.
A handful of other companies have established positions in Louisiana going from the Texas line eastward through Avoyelles, the Felicianas and beyond Baton Rouge.
The Austin Chalk formation stretches from Texas through the middle of Louisiana, including Avoyelles Parish.
“The excitement surrounding it is definitely there and measurable,” Louisiana Oil & Gas Association President Gifford Briggs said. He said the “jury is still out” as to whether the activity will turn into a full-blown resurgence of drilling in this area.
There are several variables, including difficulty to drill, costs and production potential, that will be determined with exploratory wells.
EOG Resources, which has leased about 130,000 acres, has drilled a test well in Avoyelles Parish in the Goudeau area. The firm will not comment on exploration work unless it moves into active development.
Conoco's announcement is another indication that the Austin Chalk could see a renewal of drilling activity in the near future.
Kirk Barrell, president of New Orleans-based Amelia Resources, said his firm sold 85,000 acres of leases in the Austin Chalk play to Conoco in December for $87 million. Since then, interest in Amelia's additional 360,000 acres has increased significantly.
Leasing is happening “all over,” Barrell said, with Marathon Oil recently joining in. EOG paid $200 to $300 per acre for a purchase it made about 18 months ago, he said, and recently paid $1,500 per acre for several thousand acres in West Feliciana Parish.
“It’s very encouraging to see the quality of companies coming to Louisiana,” Barrell said. “If the play works out and it’s able to be drilled and completed economically, it could be a significant situation in the state.”
Conoco declined to provide more information on its announcement, but disclosed in a news release that “most” of the 245,000 acres it acquired earlier this year are located in central Louisiana’s Austin Chalk formation. The firm said it will drill several exploration wells this year.
PetroQuest Energy from Lafayette is another company that has announced lease purchases in Louisiana’s portion of the Austin Chalk.
Briggs said Redhawk Holdings Corp. and Blackbrush Oil and Gas also have positions in Louisiana.
It remains too early to tell whether the recent activity will spur a resurgence of onshore drilling in Louisiana, and whether it will extend across the state.
So far, EOG’s exploratory well only provides insight into the area around Avoyelles Parish. Briggs said leasing also is picking up west of Avoyelles in the larger Master’s Creek and Brookeland fields in central and western Louisiana. Those fields hold the keys to boosting the state and region’s economy, he said.
“It sounds like (Conoco) is interested,” said Eric Smith, associate director of the Tulane Energy Institute. “When they start talking about how many rigs they’re going to be working, that’s when I figure out if they’re going to be doing anything.”
Louisiana industry leaders are hoping Austin Chalk wells will become profitable as companies bring newer technology from the Texas shale plays, and will eventually make drilling in the Tuscaloosa Marine Shale profitable again.
“All these variables are constantly shifting around,” Smith said. “As the technology changes, things that didn’t look so hot before are starting to look attractive now.”
One of the challenges facing the Austin Chalk is that the formation is more difficult to drill in Louisiana than in Texas, Briggs said.
He said that’s the main thing that will “keep us from becoming Texas.” Drillers have to work harder to find suitable areas of the formation for drilling.
SALTWATER DISPOSAL WELL
EOG applied for a permit on April 11 to drill a saltwater disposal well (SWD) in the North Bayou Jack Field, located in the southwest corner of Avoyelles Parish. If approved, the permit will allow EOG to inject the produced water from its oil and gas well back into the ground.
An SWD well places fluid deep underground into porous rock formations, such as sandstone or limestone, or into or below the shallow soil layer. The fluid may be water, wastewater, brine (salt water), or water mixed with chemicals.
Produced water is mixed with the water used to complete the wells when fracking. A significant portion of this hydraulic fracturing fluid returns to the surface and contains sand, clay, polymers, oil, salt and a variety of dissolved solids.
Currently the closest SWD well for EOG is near Jennings.