HOLIFIELD OIL COMPANY
FIFTY YEAR HISTORY OF THE TEXAS AUSTIN CHALK TREND
EXECUTIVE SUMMARY
The Texas Austin Chalk Trend has played large in the history of productive oilfields. This trend has been extensively drilled and documented by B. Ray Holifield, the single-most active person in the ongoing continued development of this important oil and natural gas region. By necessity, events in the Giddings Field are provided in much greater detail than other fields in the trend because of the much larger number of wells drilled and much larger amounts of oil and gas reserves developed. The Giddings Field has been the incubator of many new ideas and technological improvements to oil field technologies that have transferred to other oil fields around the world. The Giddings Field is the largest oil field found in Texas during the last fifty years. Additional productive formations called the Buda and Georgetown reservoirs immediately underlying the Austin Chalk are considered part of the Austin Chalk Trend. However, Buda and Georgetown often have their best productive areas different from the best productive areas of the Austin Chalk and sometimes require different completion techniques. No other single entity than B. Ray Holifield is positioned to take advantage of this new opportunity. Six main technologies influenced the Austin Chalk’s economic development - Acid Treatments, Large Fracture Treatments, Seismic, Horizontal Drilling, Multilateral Wells, and Underbalanced or Controlled Pressure Drilling. With these technologies working together as a drilling and completion system, economic drilling began to occur in the Austin Chalk. Ray Holifield helped lead the successful field applications of all these technologies to wells he has drilled in the play area.
Small oil and gas operators have tremendous opportunities to acquire wells and sometimes entire oil fields which have been abandoned by major oil operators and larger independent companies. The costs of these properties are sometimes so low that all or most of the financing to purchase wells can be obtained through some non-traditional sources of funding. Larger oil companies can not compete with low overhead small operators in fractured reservoirs such as the Austin Chalk because of the amount of "Tender Loving Care" required finding and producing oil economically. A large part of the ninety-seven billion barrels of mobile oil yet to be produced in the USA can be found and produced by utilizing horizontal drilling tools with the full component of 21st century systems technology applied to the Austin Chalk trend.
More than One Billion Barrels of Oil Remains to be Developed. The Austin Chalk covers a very large geographic area with over one million acres yet to be developed. The single most important factor controlling the total amount of oil to be found and produced in the Austin Chalk is related to the price of oil and gas. For example, if the price of oil is $50.00 per barrel, then the amount of oil to be produced from the Austin Chalk should well exceed 10 billion barrels. Conversely, if the price of oil is $15.00 per barrel, then the amount of additional oil to be produced from the Austin Chalk might be only slightly more than one billion barrels of oil. A substantial part of the shallow Austin Chalk trend south of the Giddings field requires oil prices exceeding $50.00 per barrel. With the current oil market at over $70 per barrel the economic incentive is unparalleled for development opportunities with lower than normal risks. Excluding the current “continued war case of high oil prices”, without war, oil will range in a new band between $45-65 per barrel. This is equivalent to the old OPEC band of $18-22 per barrel from the 1980s.
More than One Trillion Cubic Feet of Gas Remains to be Developed. Gas oil ratios greatly increase at greater depths. Fayette, Washington, Grimes and numerous additional counties located towards the Louisiana/Texas border yield huge amounts of gas at depths exceeding 10,000-15,000 feet. This development drilling is sensitive to the price of gas. The deep Austin Chalk Trend becomes one of the largest sources of natural gas for Texas when gas exceeds $5.00 per MCF.
New August 2006
I.
SIX MAIN TECHNOLOGIES INFLUENCED AUSTIN CHALK DEVELOPMENT (1950-Present)
SIX MAIN TECHNOLOGIES INFLUENCED AUSTIN CHALK DEVELOPMENT (1950-Present) A.Acid Treatments (1950's). Acid treatment of Austin Chalk wells caused considerable development during the 1950's in Pearsall Field of Frio County, Texas and several other smaller, shallower fields. Unfortunately, activity greatly subsided because of rapid declining production rates. Acid treatments are usually not required for wells drilled horizontally. Map One show the geographic area of the Austin Chalk Trend in South Texas.
Acid Treatments (1950's). Acid treatment of Austin Chalk wells caused considerable development during the 1950's in Pearsall Field of Frio County, Texas and several other smaller, shallower fields. Unfortunately, activity greatly subsided because of rapid declining production rates. Acid treatments are usually not required for wells drilled horizontally. Map One show the geographic area of the Austin Chalk Trend in South Texas.B.Large Fracture Treatments (1973). Small scale fracture treatments occurred before 1973, but were not successful in the Austin Chalk until Southland Royalty of Fort Worth, Texas used fracture treatments in Pearsall field with large amounts of treating fluid and sand injected into wells at high rates. From this apparent success, large amounts of drilling dollars were spent in Pearsall field. A few other small fields were active for a period such as Mag Field in Gonzales. With time, results were only marginally successful. Drilling declined significantly during late 1976 in the Pearsall area. However, activity in Giddings field increased in 1976 and has continued to this date. Many of these wells in Giddings were placed onto production without fracture treatment. However, many wells with little indication of production (except being near a fault) were fracture treated and produced large quantities of oil and gas. Fracture treatments of wells are usually not required for horizontal wells.
Large Fracture Treatments (1973). Small scale fracture treatments occurred before 1973, but were not successful in the Austin Chalk until Southland Royalty of Fort Worth, Texas used fracture treatments in Pearsall field with large amounts of treating fluid and sand injected into wells at high rates. From this apparent success, large amounts of drilling dollars were spent in Pearsall field. A few other small fields were active for a period such as Mag Field in Gonzales. With time, results were only marginally successful. Drilling declined significantly during late 1976 in the Pearsall area. However, activity in Giddings field increased in 1976 and has continued to this date. Many of these wells in Giddings were placed onto production without fracture treatment. However, many wells with little indication of production (except being near a fault) were fracture treated and produced large quantities of oil and gas. Fracture treatments of wells are usually not required for horizontal wells.C.Seismic (1976). The first known use of seismic to locate fractures associated with faults in the Austin Chalk Trend occurred in the Schkade #1 well drilled in the Giddings field November 1976. Ray Holifield & Associates (RH&A), Dallas-based petroleum consulting firm, was first to use seismic to position well site locations to develop fracture systems associated with faults. Clients of RH&A were successful in acquiring huge acreage positions in the Austin Chalk Trend before competition could understand how seismic was being interpreted. Most (but not all) faults intersecting the Austin Chalk in the productive part of the trend create significant fracturing, so a productive well usually occurs if the well bore penetrates a fault in the Austin Chalk interval. A true revolution in the development of oil ands gas reserves in the Austin Chalk Trend occurred because the seismic technique was tremendously successful in selecting Austin Chalk well site locations. Although some 3-D seismic has been acquired in the Austin Chalk for drilling, 2-D seismic has satisfactorily located both small and large faults necessary to locate associated fractures.
Seismic (1976). The first known use of seismic to locate fractures associated with faults in the Austin Chalk Trend occurred in the Schkade #1 well drilled in the Giddings field November 1976. Ray Holifield & Associates (RH&A), Dallas-based petroleum consulting firm, was first to use seismic to position well site locations to develop fracture systems associated with faults. Clients of RH&A were successful in acquiring huge acreage positions in the Austin Chalk Trend before competition could understand how seismic was being interpreted. Most (but not all) faults intersecting the Austin Chalk in the productive part of the trend create significant fracturing, so a productive well usually occurs if the well bore penetrates a fault in the Austin Chalk interval. A true revolution in the development of oil ands gas reserves in the Austin Chalk Trend occurred because the seismic technique was tremendously successful in selecting Austin Chalk well site locations. Although some 3-D seismic has been acquired in the Austin Chalk for drilling, 2-D seismic has satisfactorily located both small and large faults necessary to locate associated fractures.D.Horizontal Drilling (1985). In the United States, horizontal drilling dates back to the 1920s-1930s, with the first technically successful applications attempted in the 1940s. It was not until successful horizontal wells were drilled in Rospo Mare in Italy, and the first horizontal well was designed and drilled on the North Slope of Alaska before the oil industry began to give horizontal drilling a chance. In 1986, there were only 39 wells drilled worldwide, the time Ray Holifield was in the very small technical community advancing and advocating the importance of this technology. Horizontal drilling has been attempted for over fifty years but the technology was not economic until medium radius horizontal drilling commenced.
Horizontal Drilling (1985). In the United States, horizontal drilling dates back to the 1920s-1930s, with the first technically successful applications attempted in the 1940s. It was not until successful horizontal wells were drilled in Rospo Mare in Italy, and the first horizontal well was designed and drilled on the North Slope of Alaska before the oil industry began to give horizontal drilling a chance. In 1986, there were only 39 wells drilled worldwide, the time Ray Holifield was in the very small technical community advancing and advocating the importance of this technology. Horizontal drilling has been attempted for over fifty years but the technology was not economic until medium radius horizontal drilling commenced.1.Medium Radius Horizontal Drilling (1985). Testing of equipment in actual field conditions began in 1985 in Giddings field. Initially, “under the river” drilling tools were modified in 1985 by Maurer Engineering with a $1,700,000 research project funded by Bechtel Investments, Inc. The first reentry medium radius horizontal well drilled in an oil field anywhere in the world occurred in the Giddings field in Fayette County, in a well operated by J&G Operating Company, a small Houston operator working with RH&A in 1986. The well was drilled as a reentry of a 5-1/2 inch cased oil well. Bechtel and Ray Holifield formed a new horizontal drilling company in 1987 to specialize in this new technology to reenter existing oil wells utilizing medium radius horizontal drilling tools. Application of the tools provided by the partnership between Ray Holifield and Bechtel Investments (BecField Horizontal Drilling Services) in 1987 was the beginning of a large Austin Chalk oil "boom”. Unfortunately, some of the early drilling frenzy failed due to close spacing of wells, highly promoted drilling programs, sometimes inadequate well planning and equipment limitations. Early operators did not recognize that shales in the Austin Chalk were dividing the Austin Chalk into many individual reservoirs in those areas where smaller faults are present. Before 1991, horizontal wells were usually being drilled with one lateral for short distances in Pearsall and Giddings fields which opened only a small part of the total reservoir rock. Since then, wells with multiply and long laterals have greatly increased oil and gas recovery. By 1997, reentry of existing vertical wells became the preferred technique. Frequently two or more lateral are being drilled.
Medium Radius Horizontal Drilling (1985). Testing of equipment in actual field conditions began in 1985 in Giddings field. Initially, “under the river” drilling tools were modified in 1985 by Maurer Engineering with a $1,700,000 research project funded by Bechtel Investments, Inc. The first reentry medium radius horizontal well drilled in an oil field anywhere in the world occurred in the Giddings field in Fayette County, in a well operated by J&G Operating Company, a small Houston operator working with RH&A in 1986. The well was drilled as a reentry of a 5-1/2 inch cased oil well. Bechtel and Ray Holifield formed a new horizontal drilling company in 1987 to specialize in this new technology to reenter existing oil wells utilizing medium radius horizontal drilling tools. Application of the tools provided by the partnership between Ray Holifield and Bechtel Investments (BecField Horizontal Drilling Services) in 1987 was the beginning of a large Austin Chalk oil "boom”. Unfortunately, some of the early drilling frenzy failed due to close spacing of wells, highly promoted drilling programs, sometimes inadequate well planning and equipment limitations. Early operators did not recognize that shales in the Austin Chalk were dividing the Austin Chalk into many individual reservoirs in those areas where smaller faults are present. Before 1991, horizontal wells were usually being drilled with one lateral for short distances in Pearsall and Giddings fields which opened only a small part of the total reservoir rock. Since then, wells with multiply and long laterals have greatly increased oil and gas recovery. By 1997, reentry of existing vertical wells became the preferred technique. Frequently two or more lateral are being drilled.2.Short Radius Horizontal Drilling (1999-Present). This technology is successful in certain faulted areas. For example, many wells located in Lee County are perfect candidates. However, un-faulted areas such as Burleson County may not be very successful. On September 1999 Holifield Oil Company re-entered the existing vertical Vernon-Hoffman #2-RE well eight (8) miles north of the city of Giddings for horizontal drilling. Initial Potential was 413 barrels of oil and 700,000 cubic feet gas per day. Although many vertical wells have previously produced from the upper Austin Chalk, this is the first known commercial horizontal well to be drilled in the upper Austin Chalk in the Giddings field. This technology will become a standard technique for certain situations.
Short Radius Horizontal Drilling (1999-Present). This technology is successful in certain faulted areas. For example, many wells located in Lee County are perfect candidates. However, un-faulted areas such as Burleson County may not be very successful. On September 1999 Holifield Oil Company re-entered the existing vertical Vernon-Hoffman #2-RE well eight (8) miles north of the city of Giddings for horizontal drilling. Initial Potential was 413 barrels of oil and 700,000 cubic feet gas per day. Although many vertical wells have previously produced from the upper Austin Chalk, this is the first known commercial horizontal well to be drilled in the upper Austin Chalk in the Giddings field. This technology will become a standard technique for certain situations.E. Multilateral Wells (1992). Multilateral well refer to any well where more than one branch is made into a reservoir from the main trunk or wellbore in order to maintain or increase productivity of the well. The first dual horizontal well completion was accomplished by Torch Energy Advisors in 1992. Maersk also drilled the first multilateral horizontal in the North Sea in 1992. Simple uncased and cased “branches became technically feasible in 1994-1995. The uncased well advancement by industry was propelled by companies drilling opposing and stacked laterals out of the parent wellbore. The leading operator in the 1990s advancing the drilling of these type wells was Union Pacific Resources. This more complex architecture allowed for crossing more fractures and provided greater reservoir exposure for Austin Chalk wells, and allowed for draining more than one horizon. In Texas, there are many irregular shaped leases, and this technique allows for better exploitation of the resource.
Multilateral Wells (1992). Multilateral well refer to any well where more than one branch is made into a reservoir from the main trunk or wellbore in order to maintain or increase productivity of the well. The first dual horizontal well completion was accomplished by Torch Energy Advisors in 1992. Maersk also drilled the first multilateral horizontal in the North Sea in 1992. Simple uncased and cased “branches became technically feasible in 1994-1995. The uncased well advancement by industry was propelled by companies drilling opposing and stacked laterals out of the parent wellbore. The leading operator in the 1990s advancing the drilling of these type wells was Union Pacific Resources. This more complex architecture allowed for crossing more fractures and provided greater reservoir exposure for Austin Chalk wells, and allowed for draining more than one horizon. In Texas, there are many irregular shaped leases, and this technique allows for better exploitation of the resource.F.Underbalanced or Controlled Pressure Drilling (1964). While the first documented approach to drilling with underpressure occurred in design in the 1960s, commercial application occurred largely because of development of this technology in the Austin Chalk Trend, principally in the late 1980s-early 1990s. By using a simple low pressure flow diverter while drilling, Chalk drillers learned to flowdrill with pressures approaching 600 pounds to 800 pounds at the wellhead. This allowed for much more efficient and economic horizontal drilling of the critical zones. This type drilling was important to apply because of the nature of crossing depleted and un-depleted fractures in the Austin Chalk Formation. Later a company by the name of Williams Tool Company developed a more powerful diverter which could take much higher underbalanced pressures, causing a step change in making many more wells economically feasible to successfully drill and complete.
Underbalanced or Controlled Pressure Drilling (1964). While the first documented approach to drilling with underpressure occurred in design in the 1960s, commercial application occurred largely because of development of this technology in the Austin Chalk Trend, principally in the late 1980s-early 1990s. By using a simple low pressure flow diverter while drilling, Chalk drillers learned to flowdrill with pressures approaching 600 pounds to 800 pounds at the wellhead. This allowed for much more efficient and economic horizontal drilling of the critical zones. This type drilling was important to apply because of the nature of crossing depleted and un-depleted fractures in the Austin Chalk Formation. Later a company by the name of Williams Tool Company developed a more powerful diverter which could take much higher underbalanced pressures, causing a step change in making many more wells economically feasible to successfully drill and complete. II.ECONOMIC DRILLING OCCURS IN THE AUSTIN CHALK (1973-Present).
ECONOMIC DRILLING OCCURS IN THE AUSTIN CHALK (1973-Present).A.Large Fracture Treatments, Increased Oil Prices and Seismic Techniques caused Favorable Economics for Wells Drilled Vertically (1973-1986).
Large Fracture Treatments, Increased Oil Prices and Seismic Techniques caused Favorable Economics for Wells Drilled Vertically (1973-1986).1.Pearsall Field Development by Vertical Wells (1973-1982). The utilization of large fracture treatments in the Pearsall area was a technical breakthrough that caused a large number of wells to be drilled from 1973 through 1976. However, economic projections indicated oil and gas reserves being developed were only marginally economic which caused drilling activity to decline. High oil prices in 1980 and 1981 caused a moderate increase in drilling in Pearsall Field whereas the decrease of oil prices commencing in 1982 resulted in a gradual but significant decrease in activity.
Pearsall Field Development by Vertical Wells (1973-1982). The utilization of large fracture treatments in the Pearsall area was a technical breakthrough that caused a large number of wells to be drilled from 1973 through 1976. However, economic projections indicated oil and gas reserves being developed were only marginally economic which caused drilling activity to decline. High oil prices in 1980 and 1981 caused a moderate increase in drilling in Pearsall Field whereas the decrease of oil prices commencing in 1982 resulted in a gradual but significant decrease in activity.2.Giddings Field Development (1960-1986). The history of Giddings field is important to the history of the Austin Chalk because Giddings is a field extending into parts of six counties with oil and gas equal to or greater than all other fields. Most techniques to develop Austin Chalk during the last twenty-five years occurred in the Giddings field.
Giddings Field Development (1960-1986). The history of Giddings field is important to the history of the Austin Chalk because Giddings is a field extending into parts of six counties with oil and gas equal to or greater than all other fields. Most techniques to develop Austin Chalk during the last twenty-five years occurred in the Giddings field.a.Oil and Gas Development before Introduction of Seismic (1960-1976).
Oil and Gas Development before Introduction of Seismic (1960-1976).Less than six productive (but not all were economic) wells were drilled in Giddings field from 1960 to 1974. Map 2 shows Giddings field development in December 1961.The first producing Austin Chalk well in the Giddings field was the Union Producing Urban #1 well. A well one other well drilled in 1961 by Union Producing (City of Giddings #1 well) was worked over with a small acid treatment in 1973 by Chuck Alcorn producing oil at rates of over 300 barrels of oil per day (BOPD) for several years. Dan and Dudley Hughes drilled four wells during the years 1971 through 1974 with rather poor oil recovery. Houston Oil & Minerals drilled one well in 1976 and twelve wells during the last half of 1977 that also obtained mostly uneconomic results. Prairie Producing drilled three wells with one well being commercial. In 1976, the Windsor M&K #1 well was the first well in Giddings drilled with the consulting firm of RH&A. The M&K #1 well (drilled utilizing subsurface mapping) encountered a fault in the well-bore and with a potential for 463 BOPD after a small acid treatment. All wells drilled prior to M&K #1 well did not utilize seismic or subsurface control to encounter a fault in the Austin Chalk.
b.Oil and Gas Development after Introduction of Seismic (1976-1986). The Windsor Schkade #1 (the second well drilled by RH&A) was the first well drilled (November 1976) in the Austin Chalk Trend utilizing seismic with the intention of penetrating a fault to encounter associated fractures in the well-bore. Schkade #1 well initially produced oil at rates exceeding 100 barrels of oil per hour. Windsor Carmean #1 well drilled in December 1976 encountered a large gas “kick” The well commenced production in the Buda at 284 BOPD. The clients of RH&A then moved in three rigs to drill at the same time. Windsor Dean #1 well in June 1977 appeared to have noncommercial production after drilling. Pipe was set, but completion was delayed for a study of completion methods. The Fariss #1 well drilled June 1977 also seemed unproductive after drilling. Again, pipe was set with no immediate plans to complete the well. Third well, M.C. Davis #1 well, also drilled in June 1977, had oil shows so poor, the well was temporarily abandoned with no pipe being set. The future of drilling in Giddings field suddenly appeared very grim. Fortunately, Fariss #1 well was fracture treated and commenced production at 717 BOPD. Dean #1 well appeared to be uneconomic but was also fracture treated and started producing at 513 BOPD. Investors again became optimistic and approved the reentry of the M.C. Davis #1 well to set pipe and fracture treat the well which resulted in the well producing 215 BOPD. Humble Exploration, a client of RH&A, made a seven-mile step-out, to the north with the Burtschell #1 well during December 1977 with initial production of 1,094 BOPD. Also, in January 1978, U.S. Operating, another client of H&A, stepped out five more miles further north of the Burtschell #1 well in eastern Lee County and drilled their Gerdes #1 well, which produced 480 BOPD. Investors of Humble Exploration felt very secure about their well, Chicken Ranch #1 well, a fifteen-mile step-out to the south in Fayette County because seismic was being utilized. Chicken Ranch #1 well, drilled in 1978 near LaGrange, had absolutely no oil or gas shows, but produced 1,353 BOPD after fracture treatment. By this time, RH&A reluctantly declined to accept new clients because of the heavy work load. Map 3 show wells drilled through 1977, Map 4 shows wells drilled to the end of 1981, and Map 5 shows wells drilled to end of 1984. Giddings field had five completions in 1976, 57 completions in 1977, 105 completions in 1978, 186 completions in 1979, 628 completions in 1980, and 945 completions in 1981. By December 31 1981, more than 1,900 producing wells had been completed in the Giddings Field. By 1990, 4,200 vertical Austin Chalk wells had been drilled in Giddings field. Clients of RH&A have drilled more than twenty-five percent (25%) of all vertical wells drilled in the Giddings field contained in a six-county area. Majority of all wells drilled in the Giddings field during 1976, 1977, 1978 and 1979 were drilled by clients of RH&A. Giddings field is by far the largest oil and gas field discovered in the state of Texas during the last fifty years.
Oil and Gas Development after Introduction of Seismic (1976-1986). The Windsor Schkade #1 (the second well drilled by RH&A) was the first well drilled (November 1976) in the Austin Chalk Trend utilizing seismic with the intention of penetrating a fault to encounter associated fractures in the well-bore. Schkade #1 well initially produced oil at rates exceeding 100 barrels of oil per hour. Windsor Carmean #1 well drilled in December 1976 encountered a large gas “kick” The well commenced production in the Buda at 284 BOPD. The clients of RH&A then moved in three rigs to drill at the same time. Windsor Dean #1 well in June 1977 appeared to have noncommercial production after drilling. Pipe was set, but completion was delayed for a study of completion methods. The Fariss #1 well drilled June 1977 also seemed unproductive after drilling. Again, pipe was set with no immediate plans to complete the well. Third well, M.C. Davis #1 well, also drilled in June 1977, had oil shows so poor, the well was temporarily abandoned with no pipe being set. The future of drilling in Giddings field suddenly appeared very grim. Fortunately, Fariss #1 well was fracture treated and commenced production at 717 BOPD. Dean #1 well appeared to be uneconomic but was also fracture treated and started producing at 513 BOPD. Investors again became optimistic and approved the reentry of the M.C. Davis #1 well to set pipe and fracture treat the well which resulted in the well producing 215 BOPD. Humble Exploration, a client of RH&A, made a seven-mile step-out, to the north with the Burtschell #1 well during December 1977 with initial production of 1,094 BOPD. Also, in January 1978, U.S. Operating, another client of H&A, stepped out five more miles further north of the Burtschell #1 well in eastern Lee County and drilled their Gerdes #1 well, which produced 480 BOPD. Investors of Humble Exploration felt very secure about their well, Chicken Ranch #1 well, a fifteen-mile step-out to the south in Fayette County because seismic was being utilized. Chicken Ranch #1 well, drilled in 1978 near LaGrange, had absolutely no oil or gas shows, but produced 1,353 BOPD after fracture treatment. By this time, RH&A reluctantly declined to accept new clients because of the heavy work load. Map 3 show wells drilled through 1977, Map 4 shows wells drilled to the end of 1981, and Map 5 shows wells drilled to end of 1984. Giddings field had five completions in 1976, 57 completions in 1977, 105 completions in 1978, 186 completions in 1979, 628 completions in 1980, and 945 completions in 1981. By December 31 1981, more than 1,900 producing wells had been completed in the Giddings Field. By 1990, 4,200 vertical Austin Chalk wells had been drilled in Giddings field. Clients of RH&A have drilled more than twenty-five percent (25%) of all vertical wells drilled in the Giddings field contained in a six-county area. Majority of all wells drilled in the Giddings field during 1976, 1977, 1978 and 1979 were drilled by clients of RH&A. Giddings field is by far the largest oil and gas field discovered in the state of Texas during the last fifty years.3.Developments in Other Austin Chalk Fields by Drilling Vertical Wells (1975-1986). Rising oil prices and fracture treatments encouraged the drilling of many vertical wells. Drilling of Austin Chalk vertical wells in areas outside of Pearsall Field and Giddings Field, for the most part, has had only moderate success since increased activities began in 1975. Many areas in Gonzales County possessed suitable economics in 1980 and 1981 when oil was around $38.00 per barrel, but vertical drilling became increasingly unprofitable as oil price declined to and below $25.00 per barrel. Because the Eagleford Shale is thin (less than 50 feet) with large up-to-coast faulting, present in some areas, vertical wells drilled in Gonzales and Wilson counties often encounter faults allowing movement of water from the underlying Edwards Formation. Several hundred wells were drilled by RH&A with its clients in Atascosa, Wilson and Gonzales Counties, of which the Gonzales wells have been more productive. In general, the area between the Pearsall and Giddings Fields contain many millions of barrels of oil but generally requires significantly higher oil prices for drilling to be economical.
Developments in Other Austin Chalk Fields by Drilling Vertical Wells (1975-1986). Rising oil prices and fracture treatments encouraged the drilling of many vertical wells. Drilling of Austin Chalk vertical wells in areas outside of Pearsall Field and Giddings Field, for the most part, has had only moderate success since increased activities began in 1975. Many areas in Gonzales County possessed suitable economics in 1980 and 1981 when oil was around $38.00 per barrel, but vertical drilling became increasingly unprofitable as oil price declined to and below $25.00 per barrel. Because the Eagleford Shale is thin (less than 50 feet) with large up-to-coast faulting, present in some areas, vertical wells drilled in Gonzales and Wilson counties often encounter faults allowing movement of water from the underlying Edwards Formation. Several hundred wells were drilled by RH&A with its clients in Atascosa, Wilson and Gonzales Counties, of which the Gonzales wells have been more productive. In general, the area between the Pearsall and Giddings Fields contain many millions of barrels of oil but generally requires significantly higher oil prices for drilling to be economical.B.Favorable Economics for Wells Drilled Horizontally (1986-Present). Vertical drilling of oil and gas wells almost ceased in 1986 when oil prices declined to $10.00 per barrel. The hope of the future for the Austin Chalk had to be some new method to increase production for less cost. The business plan for RH&A included the possibility of drilling re-entry horizontal wells at low cost. Unfortunately, due to mechanical failures and inefficiencies of the horizontal drilling tools, horizontal drilling in 1986, 1987, and 1988 was marginally economic. Only in 1989 after major improvements in tool development did economic drilling begin to occur frequently. The low reserves being developed from 1986 through 1988 was mostly related to the drilling tools being incapable of drilling more than 1,500 feet laterally. As discussed in later sections of this report, the combination of being unable to drill long distances and inability to drill more than one lateral were severe limitations. Shale permeability barriers were often the cause for uneconomic re-entry horizontal drilling program during early development of the tools. For the most part, high cost per lateral foot drilled was encountered because the tools were not durable. During 1990, activity continued at a slow pace in the Giddings field. In Burleson County, Union Pacific Resources (UPRC) continued to drill with long radius or large angle medium radius drilling with new and expensive wells costing over $1,500,000. During 1990, UPRC was beginning to obtain some economic success because the expensive horizontal tools could drill a long distance even though they still did not drill more than one lateral hole. Since 1990, UPRC (later acquired by Anadarko) has drilled almost two thousand (2000) horizontal wells in Giddings field to become the largest (by far) user of horizontal drilling. ORYX (then Sun Oil and now a part of Kerr-McGee) drilled a new grass-roots wells in Pearsall early 1988 that produced oil at high rates. New wells drilled by ORYX in the Pearsall field appeared to have favorable economics by the middle of 1989. ORYX continued to drill these new grassroots horizontal wells but cost exceeded $1,500,000. The results of these Oryx wells caused a major increase of horizontal drilling activity in Pearsall field once costs were reduced. Over seventy-five drilling rigs were active in the Pearsall Field area by late 1990. The Pearsall Field drilling activity dramatically decreased by the end of 1990. Due to excessive drilling of horizontal wells in the same zone, severe drainage occurred so extensively that new offsetting horizontal wells were sometimes depleted by offset wells even before they were drilled. Unfortunately, the oil industry once again did not understand rapid depletion was caused by a series of barriers to vertical drainage by shales and short drain holes. As will be discussed later in this report, many of these depleted or partially depleted horizontal wells still have large reserves remaining which can be produced by re-entry of existing uneconomic horizontal wells and re-drilling new intervals. It is safe to assume that the development of the Austin Chalk in the future will always occur by horizontal drilling.
Favorable Economics for Wells Drilled Horizontally (1986-Present). Vertical drilling of oil and gas wells almost ceased in 1986 when oil prices declined to $10.00 per barrel. The hope of the future for the Austin Chalk had to be some new method to increase production for less cost. The business plan for RH&A included the possibility of drilling re-entry horizontal wells at low cost. Unfortunately, due to mechanical failures and inefficiencies of the horizontal drilling tools, horizontal drilling in 1986, 1987, and 1988 was marginally economic. Only in 1989 after major improvements in tool development did economic drilling begin to occur frequently. The low reserves being developed from 1986 through 1988 was mostly related to the drilling tools being incapable of drilling more than 1,500 feet laterally. As discussed in later sections of this report, the combination of being unable to drill long distances and inability to drill more than one lateral were severe limitations. Shale permeability barriers were often the cause for uneconomic re-entry horizontal drilling program during early development of the tools. For the most part, high cost per lateral foot drilled was encountered because the tools were not durable. During 1990, activity continued at a slow pace in the Giddings field. In Burleson County, Union Pacific Resources (UPRC) continued to drill with long radius or large angle medium radius drilling with new and expensive wells costing over $1,500,000. During 1990, UPRC was beginning to obtain some economic success because the expensive horizontal tools could drill a long distance even though they still did not drill more than one lateral hole. Since 1990, UPRC (later acquired by Anadarko) has drilled almost two thousand (2000) horizontal wells in Giddings field to become the largest (by far) user of horizontal drilling. ORYX (then Sun Oil and now a part of Kerr-McGee) drilled a new grass-roots wells in Pearsall early 1988 that produced oil at high rates. New wells drilled by ORYX in the Pearsall field appeared to have favorable economics by the middle of 1989. ORYX continued to drill these new grassroots horizontal wells but cost exceeded $1,500,000. The results of these Oryx wells caused a major increase of horizontal drilling activity in Pearsall field once costs were reduced. Over seventy-five drilling rigs were active in the Pearsall Field area by late 1990. The Pearsall Field drilling activity dramatically decreased by the end of 1990. Due to excessive drilling of horizontal wells in the same zone, severe drainage occurred so extensively that new offsetting horizontal wells were sometimes depleted by offset wells even before they were drilled. Unfortunately, the oil industry once again did not understand rapid depletion was caused by a series of barriers to vertical drainage by shales and short drain holes. As will be discussed later in this report, many of these depleted or partially depleted horizontal wells still have large reserves remaining which can be produced by re-entry of existing uneconomic horizontal wells and re-drilling new intervals. It is safe to assume that the development of the Austin Chalk in the future will always occur by horizontal drilling. III.ACID TREATMENTS (1950-Present).
ACID TREATMENTS (1950-Present).A.Vertical Wells (1950-Present). Acid treatment is one of the most cost efficient and effective procedures the oil industry has ever utilized. Wells began to be acidized in the early fifties. In fractured Austin Chalk reservoirs, acid has been used to clean cement out of the perforations and fractures and/or mud damage fractures with excellent results. Rarely has acid been able to extend the limits of drainage beyond the natural fracture system. Acid treatments seemingly are less successful in the faulted areas, than in the un-faulted micro-fractured areas.
Vertical Wells (1950-Present). Acid treatment is one of the most cost efficient and effective procedures the oil industry has ever utilized. Wells began to be acidized in the early fifties. In fractured Austin Chalk reservoirs, acid has been used to clean cement out of the perforations and fractures and/or mud damage fractures with excellent results. Rarely has acid been able to extend the limits of drainage beyond the natural fracture system. Acid treatments seemingly are less successful in the faulted areas, than in the un-faulted micro-fractured areas.B.Horizontal Wells (1988-Present). RH&A apparently performed the first acid treatment of a horizontal Austin Chalk well in 1988. Acid treatments have been used with limited success in horizontal wells in Giddings in faulted areas. For those wells experiencing mud damage or a wall-cake of drilling debris, acidizing may at times be successful in increasing production.
Horizontal Wells (1988-Present). RH&A apparently performed the first acid treatment of a horizontal Austin Chalk well in 1988. Acid treatments have been used with limited success in horizontal wells in Giddings in faulted areas. For those wells experiencing mud damage or a wall-cake of drilling debris, acidizing may at times be successful in increasing production.IV.ECONOMIC FRACTURE TREATMENTS (1973-Present).
ECONOMIC FRACTURE TREATMENTS (1973-Present).A.Massive Hydraulic Fracture Treatments of Vertical Wells with Sand (1973-1986).
Massive Hydraulic Fracture Treatments of Vertical Wells with Sand (1973-1986).The use of fluid exceeding 8,000 barrels of water with 200,000 to 400,000 pounds of sand often yielded excellent initial producing rates in numerous wells in Pearsall Field during 1973-1977 period. Unfortunately, many wells having high initial rates experienced a rapid production decline after receiving the fracture treatments. By 1977, drilling activity greatly decreased in the Pearsall area because the recoveries of oil reserves were too low. Fracture treatments gradually became larger in volumes of fluid and sand, particularly in the Giddings field. The continuing oil price increase and favorable tax laws allowed many drilling programs to be economic through 1981 in Pearsall and Austin Chalk Trend. Most programs in Giddings prior to 1986 were highly successful if a combination of seismic to select locations and fracture treatments were utilized in areas having substantial natural fractures. Since 1986, few vertical Austin Chalk wells have been drilled in the Austin Chalk Trend.
B.High Sand Concentrations (1982-1984). A costly technical error occurring in the Giddings area was related to the forceful sales of fracture treatments containing large volumes of sand during the years of 1982, 1983 and 1984 by one service company. Sand concentration of six to nine pounds per gallon with costly treating fluids was utilized with 500,000 to 1,000,000 pounds of sand. Most of these treatments occurred with pumping rates of less than forty barrels of fluid per minute (versus normal 100 barrels per minute) and vertical intervals of less than 100 feet (even 20 feet) instead of the normal 200 foot vertical interval. These fracture treatments would cost double or more of a typical Giddings fracture treatment. Results were poor.
High Sand Concentrations (1982-1984). A costly technical error occurring in the Giddings area was related to the forceful sales of fracture treatments containing large volumes of sand during the years of 1982, 1983 and 1984 by one service company. Sand concentration of six to nine pounds per gallon with costly treating fluids was utilized with 500,000 to 1,000,000 pounds of sand. Most of these treatments occurred with pumping rates of less than forty barrels of fluid per minute (versus normal 100 barrels per minute) and vertical intervals of less than 100 feet (even 20 feet) instead of the normal 200 foot vertical interval. These fracture treatments would cost double or more of a typical Giddings fracture treatment. Results were poor.C.Dendritic Fracture Treatment (1983-Present). Dendritic fracture treatments are not as new as some people believed at that time, but more a reversion back to techniques utilized by some operators in the Oklahoma Mississippi Sooner Trend ten years earlier. This type of treatment is basically a water fracture treatment pumped at rates exceeding 100 barrels per minute. Most of these wells had 60 to 100 deep penetrating "jet" perforations over a 200' vertical interval. The procedure often utilizes small grain sand during treatment to cause abrasion of the fractures and large size sand during the last stages of the treatment to prop open the fractures near the well bore. Results are excellent and low cost.
Dendritic Fracture Treatment (1983-Present). Dendritic fracture treatments are not as new as some people believed at that time, but more a reversion back to techniques utilized by some operators in the Oklahoma Mississippi Sooner Trend ten years earlier. This type of treatment is basically a water fracture treatment pumped at rates exceeding 100 barrels per minute. Most of these wells had 60 to 100 deep penetrating "jet" perforations over a 200' vertical interval. The procedure often utilizes small grain sand during treatment to cause abrasion of the fractures and large size sand during the last stages of the treatment to prop open the fractures near the well bore. Results are excellent and low cost.D.Fracture Treatments of Horizontal Wells (1989-Present). Fracture treating horizontal wells has yielded results that have not been successful in areas extensively faulted. Faults and large fractures are apparently capable of receiving large volumes of fluid that essentially prevents fracturing of the rocks. Technical capabilities exist to fracture treat a specific interval in the horizontal drain holes but involve excessive cost. Horizontal wells fracture treated in unfaulted areas such as in the northeastern part of Burleson County appear to have yielded increased production. Clayton Williams Energy regularly fracture treated wells in Burleson County with 30,000 barrels of fluid with large amounts of wax beads for diversion.
Fracture Treatments of Horizontal Wells (1989-Present). Fracture treating horizontal wells has yielded results that have not been successful in areas extensively faulted. Faults and large fractures are apparently capable of receiving large volumes of fluid that essentially prevents fracturing of the rocks. Technical capabilities exist to fracture treat a specific interval in the horizontal drain holes but involve excessive cost. Horizontal wells fracture treated in unfaulted areas such as in the northeastern part of Burleson County appear to have yielded increased production. Clayton Williams Energy regularly fracture treated wells in Burleson County with 30,000 barrels of fluid with large amounts of wax beads for diversion.V.SEISMIC TECHNIQUES (1976-Present).
SEISMIC TECHNIQUES (1976-Present).A.Acquisition and Processing Parameters (1976-Present). Part of RH&A's success occurred because of their ability to consistently locate small 25 to 40 foot faults in wells drilled in the Austin Chalk Trend. RH&A determined by trial and error that variations in the acquisition parameters and poor acquisition techniques often caused "disturbances" in the seismic data that exceeded "disturbances" caused by small faults. For these reasons, RH&A kept one to three seismic crews acquiring and processing data with exactly the same parameters. It may be of interest to know that "thumper” seismic data was not as reliable as dynamite data in the Giddings area.
Acquisition and Processing Parameters (1976-Present). Part of RH&A's success occurred because of their ability to consistently locate small 25 to 40 foot faults in wells drilled in the Austin Chalk Trend. RH&A determined by trial and error that variations in the acquisition parameters and poor acquisition techniques often caused "disturbances" in the seismic data that exceeded "disturbances" caused by small faults. For these reasons, RH&A kept one to three seismic crews acquiring and processing data with exactly the same parameters. It may be of interest to know that "thumper” seismic data was not as reliable as dynamite data in the Giddings area.B.“Seismic Gap" Problems (1976-Present). Some interpreters with limited experience in the area did not understand that the absence of one or two dynamite shots in the seismic line could cause distortions to the data greater than disturbances related to a small 25 foot fault. Several tens of million dollars worth of poor wells were drilled because some seismic interpreters did not realize the difference between a "seismic gap" and a fault. Figure 1 is a seismic line in eastern Lee County.
“Seismic Gap" Problems (1976-Present). Some interpreters with limited experience in the area did not understand that the absence of one or two dynamite shots in the seismic line could cause distortions to the data greater than disturbances related to a small 25 foot fault. Several tens of million dollars worth of poor wells were drilled because some seismic interpreters did not realize the difference between a "seismic gap" and a fault. Figure 1 is a seismic line in eastern Lee County.C.Seismic "End of Line" Problem (1976-Present). As with the "seismic gap" problem, some seismic interpreters did not understand seismic data was often unreliable near the ends of the seismic lines. Numerous poor wells were drilled because of this error.
Seismic "End of Line" Problem (1976-Present). As with the "seismic gap" problem, some seismic interpreters did not understand seismic data was often unreliable near the ends of the seismic lines. Numerous poor wells were drilled because of this error.D.Seismic "Quacks" (1977-Present). Some seismic experts with considerable reputations attempted to convince the industry certain seismic data processing techniques could assist in locating fracture porosity. One possible technical explanation why seismic data does not accurately predict fracture porosity (fractures) in the Austin Chalk is best explained if one is aware only 1% or less of fracture porosity occurs in the Austin Chalk. Small amount of porosity increase by fractures is much too small of a volume change to be recognized by seismic techniques over short lateral distances. Information was generated to drill horizontal wells based on this flawed technical concept.
Seismic "Quacks" (1977-Present). Some seismic experts with considerable reputations attempted to convince the industry certain seismic data processing techniques could assist in locating fracture porosity. One possible technical explanation why seismic data does not accurately predict fracture porosity (fractures) in the Austin Chalk is best explained if one is aware only 1% or less of fracture porosity occurs in the Austin Chalk. Small amount of porosity increase by fractures is much too small of a volume change to be recognized by seismic techniques over short lateral distances. Information was generated to drill horizontal wells based on this flawed technical concept.VI.HORIZONTAL DRILLING (1986-Present).
HORIZONTAL DRILLING (1986-Present).A.Learning Curve (1986-1989). Attempts with short radius tools for horizontal drilling has occurred for almost fifty years with no economic success until the mid 1980s. During the 1970's and early 1980's, long radius drilling was utilized but again was mostly uneconomic except for applications in oil fields with large oil and gas reserves such as Prudhoe Field in Alaska because of the large cost. Elf Aquaitane was one of the more active early operators using long radius technology in the early 1970's. Figure 3 shows the different types of horizontal tools. The years 1986 through 1989 were very difficult times utilizing medium radius horizontal drilling. Cost generally was two to four times more expensive than today on a "dollars per lateral foot" basis. Drilling bits would drill four to six feet an hour now drill 10 to 60 feet per hour. Life of tools between repairs and/or replacement was 10 to 25 hours compared to 100 to 250 hours at the present time. Proper reservoir description during the early years was a major problem preventing the production of all mobile oil. In particular, oil industry at that time did not understand the Austin Chalk interval consisted of many separate reservoirs because of the many shale (ash) intervals in relatively un-faulted areas or areas with small faults. Figure 2 portrays the frustration during the early years of development of horizontal drilling.
Learning Curve (1986-1989). Attempts with short radius tools for horizontal drilling has occurred for almost fifty years with no economic success until the mid 1980s. During the 1970's and early 1980's, long radius drilling was utilized but again was mostly uneconomic except for applications in oil fields with large oil and gas reserves such as Prudhoe Field in Alaska because of the large cost. Elf Aquaitane was one of the more active early operators using long radius technology in the early 1970's. Figure 3 shows the different types of horizontal tools. The years 1986 through 1989 were very difficult times utilizing medium radius horizontal drilling. Cost generally was two to four times more expensive than today on a "dollars per lateral foot" basis. Drilling bits would drill four to six feet an hour now drill 10 to 60 feet per hour. Life of tools between repairs and/or replacement was 10 to 25 hours compared to 100 to 250 hours at the present time. Proper reservoir description during the early years was a major problem preventing the production of all mobile oil. In particular, oil industry at that time did not understand the Austin Chalk interval consisted of many separate reservoirs because of the many shale (ash) intervals in relatively un-faulted areas or areas with small faults. Figure 2 portrays the frustration during the early years of development of horizontal drilling.B.Medium Radius Drilling Tools Allowed Horizontal Drilling to be Economic (1985-Present).
Medium Radius Drilling Tools Allowed Horizontal Drilling to be Economic (1985-Present).1.ARCO Working with Christensen in New Mexico and West Texas (Large Holes, New Wells, 1985-1986). ARCO began development of tools working with Christensen in new grassroots wells with hole sizes larger than 9 inches. This special knowledge and experience was almost lost in 1986 because both ARCO and Christensen disbanded their horizontal drilling groups at the time of the oil depression with the tools being stored in a warehouse and not being utilized during the last half of 1986 and all of 1987. ORYX began to use this technology in Pearsall field commencing at the end of 1987.
ARCO Working with Christensen in New Mexico and West Texas (Large Holes, New Wells, 1985-1986). ARCO began development of tools working with Christensen in new grassroots wells with hole sizes larger than 9 inches. This special knowledge and experience was almost lost in 1986 because both ARCO and Christensen disbanded their horizontal drilling groups at the time of the oil depression with the tools being stored in a warehouse and not being utilized during the last half of 1986 and all of 1987. ORYX began to use this technology in Pearsall field commencing at the end of 1987.2.Holifield Working with Bechtel Investments, Inc. in Austin Chalk Formed BecField Horizontal Drilling Services (Small Holes, Re-entries, 1985-1991).
Holifield Working with Bechtel Investments, Inc. in Austin Chalk Formed BecField Horizontal Drilling Services (Small Holes, Re-entries, 1985-1991).The experimental tools being developed by Bill Maurer and Bechtel Investments began to be utilized in Giddings field to re-enter existing well bores. It was hoped that re-entry horizontal drilling would generate excellent economic returns because of low cost. BecField Horizontal Drilling Services was formed by B. Ray Holifield and Bechtel Investments to introduce this new re-entry technology to the oil industry. BecField drilled seven re-entry wells in 1987, 23 re-entry wells in 1988 and 42 re-entry wells in 1989, and 96 re-entry wells to September, 1990 (when Holifield sold his interest in BecField) of which most horizontal wells were drilled out of 5-1/2 inch cased wells. This drilling by BecField represented over 50% of all horizontal wells drilled in the USA during that time.
3.Union Pacific Resources Company (now Anadarko) in Giddings Field (1988-Present). UPRC has drilled over 2000 horizontal wells in the Austin Chalk trend to this date. UPRC utilizes their experience in horizontal drilling in many geographic areas at this time. UPRC drilled mostly new grass-roots horizontal wells until 1997. Thereafter, UPRC become very active in re-entry of existing wells in those areas having existing wells.
Union Pacific Resources Company (now Anadarko) in Giddings Field (1988-Present). UPRC has drilled over 2000 horizontal wells in the Austin Chalk trend to this date. UPRC utilizes their experience in horizontal drilling in many geographic areas at this time. UPRC drilled mostly new grass-roots horizontal wells until 1997. Thereafter, UPRC become very active in re-entry of existing wells in those areas having existing wells.4.Service Companies Become Competent in Medium Radius Horizontal Drilling (1989-Present). As service companies became more adept at utilizing the technology, costs greatly decreased. The ability to efficiently drill out of casing as small as 4-1/2 inches was developed. It is now common to multilateral drill two or more stacked laterals 4,000 feet in one direction and then from the same well drill two or more laterals 4,000 feet in the opposite direction.
Service Companies Become Competent in Medium Radius Horizontal Drilling (1989-Present). As service companies became more adept at utilizing the technology, costs greatly decreased. The ability to efficiently drill out of casing as small as 4-1/2 inches was developed. It is now common to multilateral drill two or more stacked laterals 4,000 feet in one direction and then from the same well drill two or more laterals 4,000 feet in the opposite direction.C.Short Radius Drilling Tools Developed that Work Economically (1994-Present). Utilization of short radius horizontal drilling tools first became economic in 1994 in New Mexico and Oklahoma. Articulated down-hole drilling mud motors were developed that allowed precise directional control and predictability not previously available in short radius drilling operations. At this time, most of the service companies have excellent short radius drilling systems utilizing down-hole mud motors. Flexible (but expensive) composite drill pipe allow rotation of pipe for curves as small as thirty feet. Short radius wells can be drilled with much cheaper metal drill pipe if curves are greater than 70-80 feet. The best use of short radius tools is to develop fault related fractures near existing well-bores, particularly in the Upper Austin Chalk, near faults in the Lower Austin Chalk and Buda.
Short Radius Drilling Tools Developed that Work Economically (1994-Present). Utilization of short radius horizontal drilling tools first became economic in 1994 in New Mexico and Oklahoma. Articulated down-hole drilling mud motors were developed that allowed precise directional control and predictability not previously available in short radius drilling operations. At this time, most of the service companies have excellent short radius drilling systems utilizing down-hole mud motors. Flexible (but expensive) composite drill pipe allow rotation of pipe for curves as small as thirty feet. Short radius wells can be drilled with much cheaper metal drill pipe if curves are greater than 70-80 feet. The best use of short radius tools is to develop fault related fractures near existing well-bores, particularly in the Upper Austin Chalk, near faults in the Lower Austin Chalk and Buda. VII.PROBLEMS IN DEVELOPMENT OF OIL AND GAS IN THE AUSTIN CHALK BY HORIZONTAL DRILLING (1986-Present).
PROBLEMS IN DEVELOPMENT OF OIL AND GAS IN THE AUSTIN CHALK BY HORIZONTAL DRILLING (1986-Present).A.Vertical Barriers to Flow of Fluids (1986-Present). Initially, depletion from offsetting vertical wells was believed to be the cause of many of the poor horizontal wells in the Giddings field, but that was not true in most cases. Many of the early horizontal wells in Giddings commenced initial production at several hundred to over one thousand barrels of oil per day with high flowing pressures which certainly eliminates the depletion theory. The real cause of low reserves at that time was that only one fault had been penetrated by one short distance lateral well-bore limited vertically to very thin zones by shales. To workers previously involved with the drilling and completions of vertical wells, the determination of the effectiveness of shale beds in the Austin Chalk reservoir to prevent the extension of fractures through the shales was astonishing. Evidence confirmed that it is possible for shale, only inches in thickness, to prevent significant migration of fluids either up or down into the adjoining fractured intervals. The soft un-fractured shales are not permeable; consequently, the shales limit production. These shale beds are also the culprits causing ultimate recoveries in Pearsall Field to be so low. The proper application of this knowledge of these barriers to vertical permeability offers tremendous opportunities. Many of these so-called depleted horizontal wells still contain large reserves of oil that can be developed economically by the drilling of new laterals utilizing existing horizontal wells. RH&A predicts most horizontal wells drilled to date in the Austin Chalk will be re-drilled laterally two, three or more times. Conclusions of this paragraph concerning vertical separation by shales are often not applicable if large faults are present.
Vertical Barriers to Flow of Fluids (1986-Present). Initially, depletion from offsetting vertical wells was believed to be the cause of many of the poor horizontal wells in the Giddings field, but that was not true in most cases. Many of the early horizontal wells in Giddings commenced initial production at several hundred to over one thousand barrels of oil per day with high flowing pressures which certainly eliminates the depletion theory. The real cause of low reserves at that time was that only one fault had been penetrated by one short distance lateral well-bore limited vertically to very thin zones by shales. To workers previously involved with the drilling and completions of vertical wells, the determination of the effectiveness of shale beds in the Austin Chalk reservoir to prevent the extension of fractures through the shales was astonishing. Evidence confirmed that it is possible for shale, only inches in thickness, to prevent significant migration of fluids either up or down into the adjoining fractured intervals. The soft un-fractured shales are not permeable; consequently, the shales limit production. These shale beds are also the culprits causing ultimate recoveries in Pearsall Field to be so low. The proper application of this knowledge of these barriers to vertical permeability offers tremendous opportunities. Many of these so-called depleted horizontal wells still contain large reserves of oil that can be developed economically by the drilling of new laterals utilizing existing horizontal wells. RH&A predicts most horizontal wells drilled to date in the Austin Chalk will be re-drilled laterally two, three or more times. Conclusions of this paragraph concerning vertical separation by shales are often not applicable if large faults are present.B.Water Production (1986-Present). Water production from the underlying Edwards Formation can be a serious problem where the Eagleford Shale is thin in areas having large faults. For example, in no case has formation water been produced in Lee County where the Eagleford is often greater than one hundred (100) feet thick with displacement of faults usually twenty to forty feet.
Water Production (1986-Present). Water production from the underlying Edwards Formation can be a serious problem where the Eagleford Shale is thin in areas having large faults. For example, in no case has formation water been produced in Lee County where the Eagleford is often greater than one hundred (100) feet thick with displacement of faults usually twenty to forty feet.C.Depletion of Faults (1986-Present). In mature areas where many vertical wells have been drilled, it is possible for a horizontal well to encounter numerous faults with one or more faults being depleted and with other faults having original pressures. In such cases, interflow of fluids between faults instead of to the surface is a serious problem. Short radius drilling to develop individual faults can solve many of these problems.
Depletion of Faults (1986-Present). In mature areas where many vertical wells have been drilled, it is possible for a horizontal well to encounter numerous faults with one or more faults being depleted and with other faults having original pressures. In such cases, interflow of fluids between faults instead of to the surface is a serious problem. Short radius drilling to develop individual faults can solve many of these problems.VIII.OIL AND GAS RESERVES (1973-Present).
OIL AND GAS RESERVES (1973-Present). A.Reserves in Horizontal and Vertical Wells in Faulted Areas (1973-Present).
Reserves in Horizontal and Vertical Wells in Faulted Areas (1973-Present). In areas in southern Lee County, to maximize oil recovered, wells should drill as many faults as possible laterally and two or three laterals into each fault. These horizontal wells can be re-entered upon depletion so other isolated fractures can be penetrated by the horizontal hole above and below the shale barriers that divide the reservoir. Some areas may average one fault every 500 feet (horizontally), while other areas may average one fault per 1,000 feet. Thus, reserves are more related to the number of faults penetrated laterally instead of the length of the horizontal hole. It is easy to conclude a short radius well penetrating a fault by three, four or more short laterals will usually cause large reserves to be developed. Multiple laterals may have less validity when attempting to develop large faults. In such cases one fault may be sufficient. Drilling of long new horizontal holes in some areas may not be advisable because one or more faults may be totally depleted, due to production from vertical wells causing the fluids to interflow between faults which inhibit production to the surface. Figures 4 and 5 show how to develop faulted Austin Chalk by drilling horizontally or down the fault plane.
B.Reserves in Horizontal and Vertical Wells in Un-faulted Areas (1973-Present). Reserves in vertical wells in Pearsall Field have historically averaged only slightly more than 30,000 barrels per well in the better producing areas. To this date, these better areas have generally occurred in un-faulted areas. Horizontal wells exceeding 3,000 feet laterally areas in the Pearsall Field may exceed 100,000 barrels of oil per well if depletion has not occurred by the drilling of many offsetting horizontal laterals in the interval being drilled. Southern Burleson County is an area lacking faults where vertical wells regularly attain cumulative production exceeding 100,000 barrels per well. Interestingly, this area in Burleson County is so extensively drained by vertical wells that horizontal wells are often poor producers. In contrast, vertical wells located in eastern Burleson County, adjoining to Brazos County, Texas, in an un-faulted area, average less than 20,000 barrels of oil per vertical well. Horizontal wells in this same area average over 100,000 barrels of oil per well, provided wells are not drilled too close to each other to cause depletion. Figure 6 shows how to best develop micro-fractured un-faulted Austin Chalk.
Reserves in Horizontal and Vertical Wells in Un-faulted Areas (1973-Present). Reserves in vertical wells in Pearsall Field have historically averaged only slightly more than 30,000 barrels per well in the better producing areas. To this date, these better areas have generally occurred in un-faulted areas. Horizontal wells exceeding 3,000 feet laterally areas in the Pearsall Field may exceed 100,000 barrels of oil per well if depletion has not occurred by the drilling of many offsetting horizontal laterals in the interval being drilled. Southern Burleson County is an area lacking faults where vertical wells regularly attain cumulative production exceeding 100,000 barrels per well. Interestingly, this area in Burleson County is so extensively drained by vertical wells that horizontal wells are often poor producers. In contrast, vertical wells located in eastern Burleson County, adjoining to Brazos County, Texas, in an un-faulted area, average less than 20,000 barrels of oil per vertical well. Horizontal wells in this same area average over 100,000 barrels of oil per well, provided wells are not drilled too close to each other to cause depletion. Figure 6 shows how to best develop micro-fractured un-faulted Austin Chalk.IX.AUSTIN CHALK OIL AND GAS RESERVES IN TEXAS. Small oil and gas operators have tremendous opportunities to acquire wells and sometimes entire oil fields which have been abandoned by major oil operators and larger independent companies. The costs of these properties are sometimes so low that all or most of the financing to purchase wells can be obtained through some non-traditional sources of funding. Larger oil companies can not compete with low overhead small operators in fractured reservoirs such as the Austin Chalk because of the amount of "Tender Loving Care" required finding and producing oil economically. A large part of the ninety-seven billion barrels of mobile oil yet to be produced in the USA can be found and produced by utilizing horizontal drilling tools and this applies to the Austin Chalk trend. Figure 7 and 8 illustrates the total oil found and to be found by categories.
AUSTIN CHALK OIL AND GAS RESERVES IN TEXAS. Small oil and gas operators have tremendous opportunities to acquire wells and sometimes entire oil fields which have been abandoned by major oil operators and larger independent companies. The costs of these properties are sometimes so low that all or most of the financing to purchase wells can be obtained through some non-traditional sources of funding. Larger oil companies can not compete with low overhead small operators in fractured reservoirs such as the Austin Chalk because of the amount of "Tender Loving Care" required finding and producing oil economically. A large part of the ninety-seven billion barrels of mobile oil yet to be produced in the USA can be found and produced by utilizing horizontal drilling tools and this applies to the Austin Chalk trend. Figure 7 and 8 illustrates the total oil found and to be found by categories.A. More than One Billion Barrels of Oil Remaining to be Developed. The Austin Chalk covers a very large geographic area with over one million acres yet to be developed. The single most important factor controlling the total amount of oil to be found and produced in the Austin Chalk is related to the price of oil and gas. For example, if the price of oil is $50.00 per barrel, then the amount of oil to be produced from the Austin Chalk might exceed 10 billion barrels. Conversely, if the price of oil is $15.00 per barrel, then the amount of additional oil to be produced from the Austin Chalk might be only slightly more than one billion barrels of oil. A substantial part of the shallow Austin Chalk trend south of the Giddings field requires oil prices exceeding $50.00 per barrel.
More than One Billion Barrels of Oil Remaining to be Developed. The Austin Chalk covers a very large geographic area with over one million acres yet to be developed. The single most important factor controlling the total amount of oil to be found and produced in the Austin Chalk is related to the price of oil and gas. For example, if the price of oil is $50.00 per barrel, then the amount of oil to be produced from the Austin Chalk might exceed 10 billion barrels. Conversely, if the price of oil is $15.00 per barrel, then the amount of additional oil to be produced from the Austin Chalk might be only slightly more than one billion barrels of oil. A substantial part of the shallow Austin Chalk trend south of the Giddings field requires oil prices exceeding $50.00 per barrel. B. More than One Trillion Cubic Feet of Gas Remaining to be Developed. Gas oil ratios greatly increase at greater depths. Fayette, Washington, Grimes and numerous additional counties located towards the Louisiana/Texas border yield huge amounts of gas at depths exceeding 10,000-15,000 feet. This development drilling is sensitive to the price of gas. The deep Austin Chalk Trend becomes one of the largest sources of natural gas for Texas when gas exceeds $5.00 per mcf.
More than One Trillion Cubic Feet of Gas Remaining to be Developed. Gas oil ratios greatly increase at greater depths. Fayette, Washington, Grimes and numerous additional counties located towards the Louisiana/Texas border yield huge amounts of gas at depths exceeding 10,000-15,000 feet. This development drilling is sensitive to the price of gas. The deep Austin Chalk Trend becomes one of the largest sources of natural gas for Texas when gas exceeds $5.00 per mcf.Revised August 2006
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