Oklahoma Oil and Gas: Woodford SCOOP Wells Have Stamina

Oklahoma Oil and Gas: Woodford SCOOP Wells Have Stamina

The Woodford Shale itself is not a new Oklahoma oil and gas play and while some plays begin to lose hype over a few years, there is still quite a bit of emerging play buzz going on, especially in the southern portions.

The Woodford SCOOP, or South Central Oklahoma Oil Province, as coined by Continental Resources a couple of years ago, has grabbed the attention of a handful of large operators.

Continental, the clear leader in the play, plans to spend almost $900 million in 2014 to SCOOP development and exploration – almost double what the company spent in 2013.

What Makes This Play So Attractive?

As most folks already know, the SCOOP is a liquids-rich play, offering high yields of oil and condensate. However, only a few years ago, the Woodford was sought after for its natural gas production, especially in the Arkoma Basin. Here is a map showing the entire Woodford play area broken down into four play regions based on the basin of deposition, GOR, primary product and industry drilling trends. Each well is bubbled and colored by its max month of oil production in barrels per day. This gives a brief, high-level overview of the Woodford’s sweet spot areas and shows the variation in the Woodford’s hydrocarbon thermal maturity.

SCOOP-Woodford-MaxIP Oklahoma Oil and Gas

What’s Going on in the SCOOP?

With that better idea of the Woodford as a whole, I queried up some data and looked for trends or standout data points that make the SCOOP play area special. I used the customized, DI Analytics dataset for my observations. Some of the power users of these datasets call them “analytics ready” and allow for faster workflows and quicker data to answers interpretation.

SCOOP-Woodford-OilTypeCurve Oklahoma Oil and Gas

I want to look at similar plays to make sure I’m not comparing apples and oranges here, so I decided to hone in on the Bakken and Eagle Ford Oil Window since these plays compare favorably in terms of the product produced and GOR. Right off the bat, what stood out was short-term cumulative production levels of Woodford SCOOP wells compared to these other two plays. Observe the table below:

SCOOP-Woodford-CompTable Oklahoma Oil and Gas

The major points of interest here are the lower initial decline rates, which account for the first 12 months of the well’s production. This is indeed an attractive attribute of the play considering typical shale wells decline 55 %– 70%, roughly, within the first year of production.

Through the Looking Glass

While this hardly comes close to solving the “Red Queen” conundrum of needing to produce more and more just to keep up with rising demand, it does allow a minute to stop and reflect. The ability for a well to produce at strong levels long-term with favorable rates of return in the 45- 55% range (assuming $3.50/Mcf, $90/bbl and $9 MM completed well costs) is nothing to scoff at. You could expect even better economics as the play matures and well costs decline.

What Else Should We Know?

In 2010, the USGS assessed there to be about 16 Tcf of dry gas, 400 MMbbls of recoverable oil and about 250 MMbbl of condensate in the SCOOP. While this holds promise and potential, the play area also presents plenty of challenges.

  • The Woodford, whether it is Ardmore or Anadarko Basin, lies at a depth deeper than most other unconventional resource plays. This accounts for higher well costs usually in the range of $8-$10 million, with extended laterals even more costly around $13 million.
  • There is also the complex geological structure and mineralogy of the Woodford adding to the equation, a topic worthy of its own blog post.

These are just a couple of possible reasons why the SCOOP hasn’t attracted more operators to the play. Nevertheless, this is always an interesting phase of play development when operators have staked out their position, drilled a few wells, and started applying techniques and expertise gained from other unconventional resource plays to evaluate what works for well productivity. It will be fascinating to see further development unfold in the months ahead.

Your Turn

What do you think? Why do you think the lower initial decline rates are so much better in the SCOOP? Is it too late for other operators to get in the play? Please leave a comment below.

Forget Oklahoma Natural Gas – Everybody Wants a Taste of the SCOOP

Forget Oklahoma Natural Gas – Everybody Wants a Taste of the SCOOP

In our industry, whenever you hear about the Sooner State, Oklahoma natural gas comes to mind.

One of the most famous Oklahomans (besides Will Rogers) is T. Boone Pickens. The man has made it his life mission to wean us off foreign oil. Like many in the oil and gas industry, he thinks it’s time for America to take advantage of the wealth of natural gas right beneath our feet.

But consistently low natural gas prices have driven operators to look for more liquids-rich plays.

Enter the South Central Oklahoma Oil Province, or “SCOOP.”

Oklahoma Natural Gas – Escaping the Pigeonhole

Throughout 2013 oil and gas leasing activity remained fairly consistent throughout the United States. The SCOOP is the sole exception to the rule.

The play is located in Grady, McClain, Garvin, Stephens and Carter Counties. It covers the Eastern portion of the Anadarko Basin.

Continental Resources undertook significant leasing activity in the SCOOP throughout the second half of 2011 and all of 2012. Over that period, Continental gained rights to over 197,000 acres. 20% of those acres are Held By Production (HBP). Amazingly, they managed to keep the play quiet.

In late 2012, Continental announced the results of its initial wells. The results look promising. The company realized rates of return between 40-55% based on $3.50 gas and $90 oil.

Sleuthing the SCOOP

Continental’s decision to explore the area has all the makings of a great oilfield discovery story.

According to an article in the January 2013 issue of World Oil Online, Continental challenged its team in the southern portion of the Woodford to get their rate of return up in the face of declining natural gas prices. As a result, the group shifted its focus to the area now called the SCOOP.

At first, the team thought the area would primarily produce the Oklahoma natural gas we’ve all come to expect in the region.

However, initial wells showed significant amounts of oil and condensate. As they continued to study, they discovered the area actually held large reserves of oil and liquids. Current rates of return are competitive with the Bakken.

The Word is Out

In 2013, several other companies began staking out positions within the SCOOP. As a result, the region saw a 35% increase in leasing activity over the previous time frame in 2012.

While Marathon, Newfield and Chesapeake were leasing in the SCOOP in the later half of 2012, they all expanded their positions in 2013. Apache and Unit also enter the play. Not to be outdone, Cimarex holds 75,000 HBP acres in the region and is beginning to drill.

So, while Continental kept things quiet as long as they could – word’s out. And if current leasing trends hold, from a pricing perspective, the sooner you can enter the play the better.

But what else would you expect from the Sooner State?

Your Turn

What do you think will become of the SCOOP? Will the play see major land grabs in 2014? How do you feel about its prospectivity? Please leave a comment below.