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.
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.
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:
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.
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.