It has long been a fact that independent companies discover most of the gas and oil in the US.
These days development drilling dominates. Exploratory drilling has withered to 2,000 wells/year since the early 1990s from 10,000-12,000 wells/year in the early 1980s. Most discoveries find relatively small fields, especially onshore.
Striking successes are still possible. For example, private interests appear on the verge of establishing the first sustained hydrocarbon production in the Tucumcari basin of eastern New Mexico.
Montoya-Route 66
Austin, Tex., independent CKG Energy Inc. was drilling its seventh well in early May near Montoya, along the historic Route 66 highway in Quay County 20 miles west of Tucumcari.
Minimal testing has taken place, but the company found gas and has the confidence to complete a 26-mile, 12-in. pipeline to transport it eastward.
The tale of how CKG came to explore the Tucumcari basin stretches perhaps to 1981, when Houstonian and former Gulf Oil Corp. and Coastal Corp. geologist Bob McKinney assembled a play near the town of Santa Rosa. Kriti Exploration Inc., a Houston independent owned by shipping interests headquartered in Athens, Greece, drilled four wells on the Latigo Ranch in the Cuervo subbasin in Guadalupe County, NM, and found gas but not a market.
Unlocking Tucumcari
Ronald F. Broadhead, geologist at the New Mexico Bureau of Geology and Mineral Resources at Socorro, took an interest in the state's frontier basins and began conducting research.
His writings on "elevator basins" helped to rein in some of the fears associated with drilling into known "lows."
The "lows," Broadhead asserts, contain many of the geologic features needed to contain hydrocarbons: ample sands and hydrocarbon source material, good thermal maturities, and good chances for trapping.
Broadhead distilled his 2 decades of study into a three-part series published in Oil & Gas Journal (OGJ, Jan. 8, 15, and 22, 2001). That series raised awareness in the state, which provided funds for new source rock studies, which Broadhead also published (OGJ, Sept. 17, 2001, p. 34).
He cites as an example of an elevator basin discovery Rhombochasm field, a 1989 find in Cottle County, on the Matador arch in the Texas Panhandle more than 200 miles east of Montoya, NM.
Rhombochasm is considered to be producing from a "pull-apart basin" and a basin-centered gas accumulation in the Pennsylvanian (Lower Bend Group). The field was the subject of a paper in the January 2002 American Association of Petroleum Geologists Bulletin.
This seemingly unconventional—if not forward—thinking caused explorationists to revisit known shows of hydrocarbons on the oft-overlooked Tucumcari basin, McKinney said.
One such show was in the 1984 Yates Petroleum Corp. 1 T-4 Cattle Co. well, which found gas and condensate but with apparent limited areal extent. Gas was never sold from T-4, and its casing collapsed after being shut in for 2 decades.
Inter-American Corp., a Dallas exploration outfit, asserted that drilling downdip from the T-4 well might yield increased reservoir matrix and shales that would serve as both a source and a trap for hydrocarbons.
CKG Energy, agreeing with this thesis, bought the prospect and drilled it. Mike George, an Austin independent with 20 years of exploration experience, started CKG in 1999 with the mandate to seek out domestic wildcat ventures with high upside potential.
Basin-centered gas
So with the Montoya discovery at 7,000 ft in the Lower Canyon, natural gas production will start later this year from an area known mostly for its carbon dioxide production on the Bravo Dome.
As CKG completes its wells, it anticipates production reaching 3-4 MMcfd initially and perhaps 10 MMcfd or more depending on field size.
From Tucumcari, the gas will move south to Clovis, NM, through an 8-in. Public Service Co. of New Mexico pipeline. When production exceeds capacity of that line, CKG intends to build a loop line.
The participants also might market helium, which sells for $50/Mcf. Gas from CKG Energy's field on the Randals Ranch has tested an undisclosed quantity of helium.
The Lower Canyon formation also has considerable water, as does Indian Basin field, Eddy County, NM, in the Permian basin.
This will necessitate pumping of water to maximize the gas flow.
Several other formations may be productive at Montoya. The state has not yet named the field.
CKG's success has set off a lease play, with land bringing as much as five times usual prices of $5/acre or less.
