Drillers in the Eagle Ford Shale in South Texas target oil again in an old friend
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The rig working for Abraxas Petroleum Corp. is about 11,400 feet into its hunt, having drilled down about 8,100 feet before turning sideways into its ultimate target, the Austin Chalk — the geological formation that lies atop the more famous Eagle Ford Shale. The Austin Chalk stretches hundreds of miles across Texas into Louisiana and Mississippi, and in South Texas is stacked on top of the Eagle Ford like the layers of a wedding cake.
While the Eagle Ford is the oil field formation that set off a years-long drilling bonanza in South Texas, with more than 16,000 wells since late 2008, oil and gas companies have been quietly targeting other rocks above and below the Eagle Ford, too. Recent attention has zeroed in on the chalk.
“It’s been there. They’ve always known it’s there,” said Jessica Pair, upstream manager for the consulting firm Stratas Advisors. “It’s never had the same pop that it does now.”
While a good Eagle Ford well makes 500 to 600 barrels of oil per day, Austin Chalk wells produce anywhere from 120 to 600 barrels daily depending on the luck of geology — whether the well has drilled into one of the best spots.
“In all of these plays, there seems to be small areas that get great results and are economic even at lower oil prices,” she said. Good chalk wells make enough oil to attract interest even during an oil price crash, Pair said.
Oil has tumbled by more than half in the last two years, and closed at $45.41 per barrel Friday. The number of drilling rigs working in the 400-mile South Texas field once soared as high as 259 in May 2012, but have crashed alongside oil prices, hitting a low of 29 on May 27.
Since early June, four more rigs have gone back to work in the region, including this one on a rural site in Atascosa County where San Antonio-based Abraxas hopes to drill a successful chalk well.
“The chalk is a known commodity,” said Bob Watson, Abraxas CEO and president. “What we’re doing is testing new technology.”
More than 100 old vertical chalk wells are in the area near the Abraxas well, but none of them have drilled into the chalk horizontally, Watson said.
Abraxas leased around 8,000 acres in Atascosa County in 2009 to target the Eagle Ford, where it has had mixed well results. “We have some good ones and some lousy ones here, and we don’t know why,” Watson said.
The Eagle Ford is a black shale that looks like a hockey puck, and was formed when organic-rich sediments were deposited millions of years ago in an ancient sea and buried deep, creating the conditions for oil and gas formation. But some of those oil and gas molecules — which are light and always trying to move higher to the surface — escaped from the shale and were trapped in the Austin formation, made up of chalk and marl, or lime-rich mud.
Abraxas’ geologists have a theory that faults in the Eagle Ford around the company’s acreage near Jourdanton allowed more oil to escape into the chalk in some places.
“That would explain why some of our Eagle Ford wells are good and some are poor,” Watson said. “A certain amount of oil escaped into the Austin Chalk. That’s our theory. Once it gets in the chalk, it can’t go any further. It’s a cap, it’s a seal.”
Like any geological formation, the Austin Chalk isn’t a uniform, flat layer. Its breaks above the surface in a wide belt through Texas’ capital where it gets its name, but it’s buried deep in South Texas. The Abraxas Austin Chalk well is about 1.5 miles below the surface.
Now companies not only drill horizontally in the chalk but also are using the same technology, hydraulic fracturing, that they use in the tight Eagle Ford formation to get oil to flow. Fracking uses millions of gallons of water and chemicals pumped at high pressure to crack the rock before sand is pumped into the mixture to prop open those fissures, allowing oil and gas to flow up the well.
Though some of the largest publicly traded operators in the field have been touting their Austin Chalk acreage, it’s privately held firms, including Austin-based Texas American Resources Co., that have done most of the work in the chalk, Pair said. “It’s dominated by private companies,” Pair said. Counties where operators are targeting the chalk include Karnes, Dimmit, Frio and Fayette.
Public companies drilling in the Austin Chalk include Murphy Oil, which drilled its first chalk well in Karnes County last year, but said in its most recent earnings call with analysts that it estimates it has another 265 chalk wells left to drill.
In 2015, 56 of the company’s 276 new South Texas wells were drilled in the Austin Chalk, according to the company’s earnings reports.
In the first three months of the year, Marathon started selling oil from 50 new wells in South Texas. Eight of those targeted the Austin Chalk.
EOG Resources, the largest operator in the Eagle Ford Shale, earlier this year announced it had completed two exploratory wells in the Austin Chalk, both of them pumping more than 2,000 barrels per day in their first month. It plans another seven this year and has called the chalk “a new geologic concept in an existing play.”
EOG declined to comment, but the Houston-based company recently leased more acreage, where Watson believes EOG intends to drill the chalk, not the Eagle Ford. It’s right across the county road from the Abraxas drilling site in Atascosa County.
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