The East Texas Basin, a rather large Jurassic-Aged basin containing a number of hydrocarbon-bearing formations stretched across the northern part of East Texas and West Louisiana, has been making fortunes for mineral-rights owners, drillers, landmen and entrepreneurs since oil was first struck by Columbus Marion (Dad) Joiner (and his rather creatively-financed syndicate) on September 5, 1930 in Rusk County, Texas.
The initial focus of operations was the Woodbine – a late-cretaceous formation which had abundant pressure and reserves across a five-county chunk of Northeast Texas to create plenty of gushers along the way and has produced 5.42 billion barrels of oil to date.
Image Source: http://www.beg.utexas.edu/starr/ur_haynesville.php
A few very interesting asides about those early operations:
- The price of oil collapsed from 99 cents a barrel to 46 cents with the first year of operations. The drillers responded by producing more.
- During World War 2 the “Big Inch” pipeline delivered East Texas crude to Pennsylvania through its 24” diameter pipe.
- In 1960, some drillers working for Shell oil noticed fresh drilling mud coming up from their operations, and uncovered what ultimately turned out to be 380 “slant-hole” wells – wells that had been drilled directionally from adjacent leases into richer parts of the formation.
More recently (the last decade or so) our attention has been focused on the incredibly gas-rich Haynesville Shale formation – a deeper, larger and older Jurassic-period formation that stretches across even more of the ArkLaTex region. The Haynesville has been very productive for horizontal hydraulic fracturing operations, and is very near the packaging and transport hubs on the gulf coast.
Last month at OGIS I saw a great presentation from Memorial who are a pure play operator focused on the over-pressured Cotton Valley formation in Northern Louisiana. Among other interesting tidbits they presented,
- Since 2012, 95 of ~20,800 horizontal gas wells in the U.S. have peak monthly production over 21 MMcfe/d
- 36 of those were drilled by Memorial
- Memorial has drilled 68 wells in the top 2% of the ~20,800 horizontal wells (51 wells in the top 1%)
Source: Company OGIS 2016 Presentation
Well that really popped out at me – they’re bringing on some real boomers there. Normally we see a lot of emphasis on the gigantic Marcellus wells, but there’s a reason that the Louisiana portion of the East Texas Basin is still alive. (Memorial’s stock performed very well last week.)
Then last week, as I was researching something else, I happened to glance at the “active rigs by basin” metric and saw that there are as many rigs operating in the East Texas Basin as are operating in the Niobrara (14 that day in each). Then I zoomed in on activity in the area and noticed there were even more rigs operating just outside the basin proper to the east and west.
To be fair, portions of the Niobrara are proving to be fairly oily, which does make it a little more interesting to the Oil folks, but for the Oil & Gas folks I thought I should analyze the activity a little bit more.
East Texas Basin Production
Ok let’s take a quick look at production in the basin.
On the left we see the counties with those early Woodbine wells – Gregg and Rusk in particular, have pretty sizable bubbles vs. the rest of the ArkLaTex. On the right, despite Panola counties dominance, we see fair amounts of gas having been produced throughout the area.
Oh – those are parishes in Louisiana – not counties.
Using another interface, combining oil and gas output (6:1 BOE) for the first 6 months of well production, and overlaying rigs, we see that whole basin is filled with opportunity. I’ve also overlaid current rig locations.
Now lets zoom in a bit on recent rig activity.
Two things really stand out in this view:
- Strong Clusters of Activity in De Soto Parish, and Lincoln Parish off to the East; and,
- Vertical Rigs are doing laps in Claiborne and Bienville Parish.
And as we can see from our Drilled and Uncompleted Wells tool, operators appear to be storing production in place much as they are in the rest of the country.
Since we saw such a nice focus of activity in De Soto Parish, let’s take a peek at their permitting for the past few years.
We definitely see Q4 spikes each of these years, but overall activity looks to have only dropped around 5-10 permits per quarter. Total Depth has been creeping up steadily, and the few permits filed for Q2 so far are obviously for rather long spans.
As I mentioned earlier, the East Texas Basin operations are very close to market. It’s also important to realize how incredibly networked the pipelines are – take a look at this snapshot of pipelines in place near the small town (pop 14,518) of Kilgore, TX in Gregg County.
Decline Curve Analysis
Since we have a new tool for decline curve analysis here at Drillinginfo, let’s take a peek at Gas Decline Curves for the past three years in De Soto Parish.
- On the left wee see well locations colored by operator
- On The right we see the Model Type options available – if you select multiples, our Auto Fit algorithm will determine the closest match
- The type curve for the wells is displayed in the middle, along with Probabilistic Reserves charts
A few years ago Encana was putting a fair amount of effort into refracking, or restimulating, older Haynesville wells. Since then Encana have sold their Haynesville assets to GEP, who are privately held (for $850 million!). One would assume that GEP plans to carry those re-stimulations forward, as Encana will continue to manage production for the next five years and as new LNG terminals and the new improved Panama canal come online.
The East Texas Basin continues to operate at a slightly heavier clip than you might anticipate, in part because of the closeness of adequate market, in part because of the thunderous potential of the Haynesville Shale, but mostly because there are lots of oil & gas folks who are still in the game.
What do you think? Leave a comment below.
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