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  • Four Bakken-Like Plays Emerging Across the Nation's Midsection

    11 September 2014

    Bounded by the Appalachians to the east and the Rockies to the west, North America's midsection is a patchwork of shallow crustal basins separated by uplifts, gentle arches and domes. Over hundreds of millions of years of geologic time the basins, covered by shallow seas, filled with sediments that would eventually harbor tremendous stores of oil and natural gas.

    The nation's mammoth shale oil and shale gas plays - such as the Bakken, Texas' Eagle Ford and Barnett, eastern states' Utica and Marcellus - are now getting most of the press. But, there's more to the story. Tucked away here and there throughout the Midwest are smaller plays that are contributing or will contribute a respectable share to our oil and natural gas supply. And they will follow the Bakken's lead and use directional drilling and hydraulic fracking to extract the hard-to-get reserves stimulating job growth and new wealth. The following four plays are among the most promising:

    Nitrogen fracking

    In April 2014, the states of Illinois, Indiana and Kentucky combined produced about as much oil as North Dakota produced in a single day - slightly more than 1.1 million barrels. And while no one expects production there to ever reach Bakken proportions, a shale play that resembles the Bakken in more ways than one is gaining momentum. The unit is called the New Albany shale.

    The New Albany covers approximately 60,000 square miles with depths between 200 and 5,000 feet. Its deepest point is roughly where the three states meet - beneath the confluence of the Ohio and Wabash Rivers. Current Energy Information Administration (EIA) technically recoverable reserve estimates stand at 11 trillion cubic feet of natural gas and 189 million barrels of oil. (Natural gas in-place is estimated to be 160 trillion cubic feet.) Those estimates are undoubtedly outdated and are likely to be pushed upward.

    Like the Bakken, the New Albany was deposited in a shallow sea covering the Illinois Basin. Its age is nearly identical to the Bakken - laid down roughly 360 million years. Again, like the Bakken, it consists of layers of dark, organic-rich shale. However, unlike the Bakken, the New Albany has responded fairly well to traditional, vertical well drilling because it has a relatively dense network of natural fractures allowing oil and gas to reach the well bore without fracking. The fractures were most likely created hundreds of millions of years ago with the mountain-building episodes in the Appalachians.

    Historically, daily natural gas production from the New Albany has been steady but low and used mostly for local home heating and agricultural purposes. Natural gas was discovered in the New Albany in Illinois in 1853 when settlers were drilling for salt water to use as a food preservative. Production from the New Albany peaked in the mid-1990s. Some 32,000 vertical wells still produce oil and natural gas.

    Most of the current leasing and drilling activity is now taking place in Illinois with less, but steady, activity in Indiana and Kentucky. Wells are being drilled up to 4,000 feet with 1,000-foot laterals in 20-100-foot pay zones. Companies across the play are now employing horizontal drilling almost exclusively and using nitrogen gel rather than water to propel fracking sand. This method uses little water but costs about 15 percent more than hydraulic fracking. CNX Gas Corporation, EOG Resources, Noble Energy and Sundance Energy are among a dozen or so larger companies that now hold leases and have drilling underway or planned. Bills are being considered in all three states that will further regulate fracking and wastewater disposal.

    Good news for Michigan

    In the geologist's world adjacent rock units that match one another in age, mineral and fossil content, and other characteristics are said to "correlate." That's the case with the New Albany formation and Michigan's Antrium shale, an oil- and gas-bearing unit that also underlies part of northern Ohio and Indiana as well as a narrow strip of Ontario, Canada.

    The lower peninsula is underlain by the Michigan Basin, a bowl-shaped depression that - much like the Williston and Illinois Basins - filled with organic-rich sediments over hundreds of millions of years of geologic time. Oil and gas were discovered in the basin in 1886 with peak production during the 1920s and 30s. Hydrocarbons have been produced from rock units as old as 500 million years and as young as two million. By the mid-1980, with falling oil prices, companies nearly abandoned further drilling in Michigan.

    Natural gas production from the Antrium shale began in 1940 in north-central Michigan with some of the early wells still producing. Because the shale is highly fractured, vertical drilling has been the norm. Wells are shallow - just 400 to 2,000 feet deep and generally cost less than $200,000 to complete. Wells have a typical lifespan of 20 years. Antrium reserve estimates vary widely. EIA estimates reserves at about 3 trillion cubic feet while industry officials put the number at 20 trillion. EIA ranks the Antrium as the nation's 13th largest current natural gas producer.
     
    While horizontal drilling and hydraulic fracking have not been widely used here, that's most likely going to change. Large companies like Encana, Devon Energy, Whiting Petroleum and Ft. Worth-based QuickSilver Resources have all bought large lease tracts with the intent to frac. With one of the nation's highest unemployment rates, Michigan officials feel Antrium development will produce thousands of new jobs and millions of new state revenues.

    Razorback frac

    Although seldom mentioned among oil-producing states, Arkansas has had a small but steady oil industry since the early 1920s. During the past 90 years the state has produced nearly two billion barrels, mostly in 10 southern counties. Arkansas is now gaining recognition as a natural gas producer.

    Straddling the state's midsection east to west is a deep basin called the Arkoma - so named because it stretches across the Arkansas-Oklahoma state line. The basin encompasses approximately 33,000 square miles and reaches depths of over 20,000 feet. Drilling interest in the Arkoma Basin is centered on the Fayetteville Shale, a dark, dense rock unit that is packed with natural gas.

    The Fayetteville is a relative newcomer to exploration and production. In 2004, Houston-based Southwestern Energy drilled the first horizontal well into the Fayetteville. (The company is also active in Pennsylvania's Marcellus play.) At year-end 2013, the company reported having more than 4,100 producing Fayetteville shale wells and some 900,000 acres leased, more than one-third of the play's total. Drilling depths range from 1,470 feet to 6,700 feet with 5,300-foot horizontal laterals. Southwestern says wells average 6.2 days to complete with an average cost of $2.4 million. The Fayetteville shale is very brittle and responds well to fracking.

    Although Southwestern Energy is the play's largest leaseholder, other companies have large lease holds and active drilling programs as well. They include: KCS Resources, XTO Energy, Petrohawk and others. In 2011, Chesapeake Energy, then the play's second largest leaseholder, sold its 487,000 Fayetteville leased acres to BHP Billiton.

    In late 2010, Kinder-Morgan Energy Partners and Energy Transfer Partners completed the 185-mile, 42-inch Fayetteville Express Pipeline, which terminates in Panola County, Mississippi. The two-billion dollar investment has a capacity of two billion cubic feet per day. The gas is marketed to the northeastern United States replacing declining Gulf Coast deliveries. In 2009, EIA estimated the Fayetteville shale to contain 41.6 trillion feet of recoverable natural gas.

    New life for the Sooner state

    During the 20th Century's first decade, Oklahoma claimed itself to be the world's leading oil producer. And it remained the top producing state until overtaken by California in the 1920s. In fact, it was the state's oil reserves that sped its way to statehood in 1907. By, the late 1920s and early 1930s, Oklahoma production was averaging more than 750,000 barrels per day. By the late 1970s exploration and production began a steep decline. Today daily production stands at about 350,000 barrels per day - about one-third of North Dakota's.

    But, a revival is under foot. The state's Woodford shale has produced natural gas (albeit in relatively small quantities) since the mid-1930s. The Woodford is a tight, dark shale that was (like the Bakken, New Albany, Antrium and Fayetteville) deposited about 360 million years ago. It is found in five separate Oklahoma regions including the Arkoma Basin and the Anadarko Basin to the south. Its pay zone is 50-300 feet thick.

    A horizontal gas test well was completed in the Woodford in 2003, with the first production well in 2005. By 2008, more than 750 wells had been drilled - nearly all producing natural gas in the Arkoma Basin with Newfield Exploration the biggest producer. In October 2012, Continental Resources announced a huge oil discovery in the Fayetteville shale in the Anadarko Basin in southern Oklahoma. Today, Devon Energy is the play's largest leaseholder with Continental, ExxonMobil and Marathon having substantial holdings.

    A 2010 United States Geological Survey estimate placed Woodford shale oil reserves at 400 million barrels, gas reserves at 16 trillion cubic feet and natural gas liquids at 250 million barrels. Woodford shale wells are typically 6,000 to 12,000 feet deep and cost $8 million to $10 million to complete.

    @ 2014 Bismarck Tribute

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