Independents are drilling deeper than the Austin Chalk to tap the Buda, Georgetown and Glen Rose formations, which have many similarities to the chalk formation.
Independent oil companies are working hard to produce new reserves from old fields using horizontal well technologies. The Giddings field in central Texas is a prime example of how such perseverance pays off. Although this play has been around since the 1960s, when vertical wells were marginally successful, Anadarko and others have revitalized the area using horizontal drilling techniques in deeper formations, and they are producing sustained volumes of much needed gas.
"By drilling deeper, we're finding much stronger results than anyone previously thought were possible," said John Seitz, Anadarko president and chief operating officer. Anadarko has nine drilling rigs operating in central Texas, including four tapping two formations beneath the Austin Chalk: the Georgetown formation, which is rich in gas, and the Buda formation, which produces gas and oil (Table 1). The formations are separated from the Austin Chalk by the thick, troublesome Eagleford marine shale.
Last year, Anadarko drilled a re-entry well, the Becker No. 1, to explore beneath the Austin Chalk. That well produced at an initial rate of 50 MMcf/d and is still producing 10 MMcf/d. Cumulative production since being redrilled in July 2000 is more than 9 Bcf. A second well was drilled nearby, and in April Anadarko announced the Fife Unit No. 2 well came in March 24, at 51 MMcf/d of gas flowing with 1,510 psi of tubing pressure. The Fife well, in the Navasota River field of Washington County, Texas, reached a 14,080-ft (4,294-m) TVD and then was drilled laterally for nearly 5,000 ft (1,525 m). Anadarko has three more new wells and one re-entry well under way nearby.
Horizontal wells are drilled as a single lateral, as stacked laterals drilled in the same direction but tapping different formations (Figure 1), or as opposing dual laterals with one leg drilled up-dip and one leg drilled down-dip with the azimuth perpendicular to the N65°E fracture orientation. One well had six dual opposing laterals, two each in the Austin Chalk, Georgetown and Buda formations, adding up to 36,000 ft (10,980 m) of laterals.
Re-entries are drilled by first setting a whipstock and milling a window, then drilling the lateral and setting a liner. Targeting the wellbore is accomplished using a measurement-while-drilling gamma-ray tool. Other cost-saving drilling technologies include dual and triple mud motors, mud cap drilling and rotating blowout preventers (BOPs). Dual mud motors significantly increase penetration rates. The mud cap drilling method, where fresh water is pumped down the drillstring while a mud system is maintained in the annulus, is used when mud returns are lost to the fractures. Rotating BOPs allow drilling with standpipe pressure up to 6,500 psi. The horizontal wells generally are completed open hole in the hard rock formation, but sometimes liners are run around the curve to ensure wellbore integrity.
Rex Alman, senior vice president of domestic operations, said Anadarko uses the "offsetology" technique to select potential drilling locations. "There are so many wells out there, it's easy to analyze the data and find a good correlation or do some extrapolation. Sometimes we're right, occasionally we're wrong, but we're right a whole lot more often than we're wrong."
Of the 100 development wells Anadarko had planned for 2001 in the Giddings field, about two-thirds will be re-entries of existing wells. The company holds 750,000 net acres in the greater Giddings area and operates more than 1,200 wells, so there is considerable potential to exploit the deeper formations.
"The Austin Chalk was Union Pacific Resources' (UPR's) premier play, and since the merger a year ago, activity has increased because Anadarko was able to fund more of the UPR projects. We picked up a lot of people with great ideas when we merged with UPR," Alman said. "We're very encouraged by the future potential of the chalk, as workovers and frac jobs have increased production. And now with the deeper Georgetown, Buda and Glen Rose successes, this has become a very prominent play."
Glen Rose looks rosy
Magnum Hunter has a joint venture with Anadarko to exploit the Glen Rose formation, a fractured reef reservoir in Madison County, Texas, that is even deeper than the Georgetown and Buda formations. Magnum Hunter had signed an exploration agreement in 2000 with UPR, later acquired by Anadarko, to jointly drill dual horizontal wells with opposing laterals to tap the Glen Rose in the area of mutual interest, which covers about 75,000 mineral acres. Anadarko serves as the operator during the drilling phase, and Gruy Petroleum Management Co., a wholly owned subsidiary of Magnum Hunter, operates field production.
As of early August, three wells had been successfully drilled vertically to about 12,000 ft (3,660 m) and then horizontally across 8,000 ft (2,440 m) of the Glen Rose formation. Cumulative production from these three wells exceeds 3 Bcf of gas equivalent, and production is about 12 MMcf/d. A fourth well, the Ribeye No. 1, is being drilled. Two horizontal legs are planned for this well, one 7,900 ft (2,410 m) in one direction and 9,200 ft (2,806 m) in the opposite direction, so as to intersect as many natural fractures as possible. The two companies plan to continue drilling in the area with eight to 10 more wells, said Mike McInerney, vice president of corporate development and investor relations at Magnum Hunter. "This has been a great project for us. Having Anadarko doing the drilling has really enhanced operations. We expect to be drilling there for some time."
"Our results in this play have been very favorable," said Richard Frazier, chief operating officer for Magnum Hunter. "More than (US) $13 million of gross revenues have been received from production sales from the first two wells, which exceeds the cost of drilling and completing all three producing wells. We look forward to additional drilling opportunities in this area and expect to generate an excellent return on capital employed for the project."
Deep, down-dip gas play
In December 2000, Dallas, Texas-based Belco (now owned by Westport Resources) participated in a new Georgetown formation discovery well in Washington County. The Ricks No. 1-H well originally was drilled as a single lateral horizontal well in the Austin Chalk formation and produced about 9.6 Bcf of gas. The well was re-entered, and a 3,000-ft (915-m) lateral was added to the Georgetown formation, which commenced production at an initial rate of about 40 MMcf/d. The well paid out in 2 weeks and is still producing at a rate of about 38 MMcf/d. Chesapeake Energy Corp. operates the well and owns 54.4% net revenue interest.
Belco subsequently participated in a second Georgetown discovery, the Carl No. 1-H well, which commenced production Jan. 31 at an initial rate of 24 MMcf/d of gas. A third Georgetown well, the Schulte No. 2-H, was somewhat disappointing compared to the first two wells. This well commenced production March 8 at an initial rate of only 1.5 MMcf/d. Belco's fourth Georgetown test, the Weiss No. 2-H well in the Brenham Dome area, was expected to be completed and evaluated before the end of the second quarter.
Belco holds an extensive acreage position in the Giddings field area, and about 200 of Belco's Austin Chalk wells are still producing, therefore they won't be candidates for re-entry laterals until they are further depleted. However, two new "grass-roots" wells are being drilled from the surface to tap the Georgetown formation, which lies 500 ft (153 m) deeper than the Austin Chalk. The new horizontal wells will be drilled to 15,000 ft to 20,000 ft (4,575 m to 6,100 m) TVD, then kicked off to drill a 3,500-ft (1,068-m) horizontal section. Based upon the initial successes of the Georgetown play, Belco expects to increase the drilling activity in the greater Giddings area during the remainder of the year, keeping two or three rigs occupied full time.
Westport Resources Corp. took notice of Belco's Georgetown successes and announced in June that it had signed a definitive merger agreement to acquire the company for $922 million. The merger, which essentially doubled Westport's production volume, was closed Aug. 21. The combined company will take advantage of synergies and economies of scale to capitalize on Belco's large inventory of exploratory and development projects at a more rapid pace, said Belco Chief Executive Officer Robert Belfer, who will join Westport's board of directors.
Grant Henderson, executive vice president of Westport Resources, said there was a good correlation between the Austin Chalk and Georgetown plays. "They both have the same fracture system," he said. "We're very excited about this trend. It's a lower-risk play. Wells that had good Austin Chalk production will likely have good Georgetown production." Belco has participated in more than 100 Austin Chalk wells. About 60 of these wells have produced more than 4 Bcf of gas each, and so Westport has identified about 100 locations where the merged company will have the best success tapping the Georgetown gas.
Clayton Williams branches out
Clayton Williams Energy Inc. established a reputation for horizontal drilling in the Austin Chalk. During 2000, the company drilled 15 horizontal wells and performed 19 water fracs in Robertson and Burleson counties, spending nearly $21 million on these Texas prospects. This brought the number of producing wells to 286 in the updip Giddings area, where the company owns 113,000 net acres of mineral rights (Figure 2). Clayton Williams Energy is producing about 5,700 b/d of oil and 4 MMcf/d of gas from this area. In 2001 the company plans to drill 11 horizontal wells in the Austin Chalk, with a budget of $13.5 million.
Company President and Chief Executive Officer Clayton Williams said, "Last year was a record year that we are all proud of. We drilled or participated in more than 70 wells, of which 60 were producers. We have become a diversified operation that's active in many premier areas of onshore exploration through the use of horizontal drilling and 3-D seismic technology coupled with an old-fashioned land approach.
"We were drilling Trend wells, Chalk horizontal wells, for $800,000 a year ago. Now they're costing nearly $1.3 million. So we're backing away from drilling. But we have drilled most of the Austin Chalk that's economic at this time. So we've been looking ahead for some years into the Pinnacle reefs or south Louisiana or New Mexico north, and we've changed dramatically from an Austin Chalk company to a more diversified company, which is more where we want to be."