Red River play, Gulf Canada deal boost Williston basin

High levels of activity in the Williston basin are assured this year with an expanding horizontal drilling play for oil in Ordovician Red River.

The Red River play, like the Mississippian Lodgepole mound play, is centered in North Dakota. But the Red River play is much larger, extending into eastern Montana and northwestern South Dakota (Fig. 1 [97462 bytes]). More than 500 Red River B wells have been staked.

Lodgepole mound oil completions have been restricted thus far to Stark County, N.D. This play has cooled markedly since its 1995 heyday, partly due to difficulty with identifying the reservoirs on 3D seismic profiles, says a new publication from Petroleum Information Corp., Houston.

"In direct contrast, it was becoming clear that the Red River 'B' defined a reservoir with a significant degree of regional continuity, capable of supporting more than 100 horizontal wells on mixed 320- and 640-acre spacing. Total limits for the play, originally predicted to be on the order of 30 sq miles, now appeared to be as large as 200 sq miles or more," writes Scott Montgomery in PI's Petroleum Frontiers quarterly.

The play is centered on Cedar Hills pool, in 130n-105w, Bowman County, N.D. But Red River B successes have been reported as far north as Saskatchewan.

One of the most recent companies to position itself in both plays is Gulf Canada Resources Ltd. The company forged an agreement with the Assiniboine and Sioux Indian tribes.

The agreement initially provides Gulf access to about 800,000 acres on the Fort Peck Indian Reservation, mostly in Roosevelt County, Mont., on the western slope of the Williston basin (Fig. 2 [97462 bytes]). Under an option, Gulf's access could later expand to cover the reservation's remaining 1.3 million acres.

Red River B scope

Red River B, previously considered a significant but still secondary reservoir, "is now perceived as a regional productive zone whose potential outweighs that of all other Red River zones in the same area combined," Petroleum Frontiers concludes.

The play has been building since initial completions in late 1994-early 1995. More than a dozen discoveries had been made by mid-1995, and some 100 wells had been completed by summer 1996.

Main Red River B operators are Meridian Oil Inc., Continental Resources Inc., Chesapeake Energy Corp., Cenex, Shell Western E&P Inc., and Union Pacific Resources.

The Red River B porosity zone is a 6-12 ft thick dolomitized mudstone, capped by anhydrite and existing at 8,400-9,200 ft. Porosities/ permeabilities are 10-20% and 5-20 md, respectively.

Better wells are likely to yield 250,000-500,000 bbl in 5-10 years. Vertical wells that don't exceed 55,000 bbl and horizontal wells that don't exceed 75,000 bbl count as dry holes, operators indicated to PI.

Among limitations that might be visualized are poor structural position, reservoir heterogeneity, proximity to established vertical production (low reservoir pressure), horizontal laterals that dip into the water zone, bad hole conditions (wells are completed open hole), and excessive formation damage.

Horizontal drilling could have other Williston applications in Silurian Interlake, another cyclic carbonate reservoir; Devonian Winnipegosis reefs; and Devonian Duperow reservoirs with their complex porosity distribution, PI reported.

Gulf Canada's role

The Fort Peck reservation lands are on trend with the large Red River play (OGJ, Jan. 15, 1996, p. 21).

Gulf Canada also hopes the lands could be prospective for the basin's actively-explored Lodgepole reefs (OGJ, Aug. 7, 1995, p. 74) Access to the Fort Peck area "sets us up for further exposure to multizone drilling that includes Lodgepole, Red River, and other targets," confirmed Bill Picquet, Gulf Canada senior vice-president, North America.

The pact is part of a Gulf Canada land acquisition program in the U.S. Rocky Mountain region. Prior to the accord, Gulf's interests in the region covered about 400,000 net acres in Montana, North Dakota, Wyoming, and Utah, including 60,000 acres at the Fort Peck Reservation.

Fort Peck

In an unusual ar- rangement, the tribes will receive 20% of net revenues, after operating expenses, on any future production from all lands-not just tribal lands-in the mineral development area.

Typically, tribes are compensated in royalty and interest, but only on output from tribal lands. In addition to tribal lands, the Fort Peck Reservation includes land holdings allotted to individual tribe members, as well as privately-owned fee lands.

Under the terms of the deal, the tribes will contribute 110,000 acres of tribal lands and Gulf Canada will contribute the 60,000 leased acres. In addition, Gulf Canada will spend an estimated $2 million to acquire nontribal lands to bring the total area covered by the agreement to about 800,000 acres. The agreement supports the tribes' interest in expanding ownership of resources at essentially no risk, tribal chairman Caleb Shields said.

Gulf Canada will act as exclusive contractor in the mineral development area under the accord, which requires approval by the U.S. Interior Secretary. Beyond the investment in additional lands, Gulf Canada will put up the capital needed for seismic, drilling, development, and any future production facilities.

Gulf Canada has agreed to a minimum of 80 sq miles of 3D seismic and drilling of at least four exploratory wells within 5 years. The company plans to launch a 60 sq mile seismic program in first quarter 1997 and drill as many as two wells by yearend. Minimum initial investment is expected to be around $6.5 million.

Gulf Canada portfolio

The Fort Peck program dovetails significant activity by Gulf Canada elsewhere in the Williston basin.

The company late last year completed a 3D seismic program on a leasehold in the Lodgepole trend of northwest central North Dakota, where the first exploratory well is planned for early this year.

Gulf Canada holds a 100% interest in 300,000 acres in the northern portion of the leasehold and is a 60-40 partner with Conoco Inc., respectively, on 161,000 gross acres in the southern portion of the leasehold. Conoco will drill the first well; the agreement calls for alternating operatorship in different townships thereafter.

Gulf Canada also completed 3D seismic on a 23,000 acre net leasehold on the Ukrainia block in southwestern North Dakota. A company spokesman said there was one unsuccessful Lodgepole test in 1996; two more wells are planned for 1997.

In addition, Gulf Canada finished 3D seismic and planned to begin exploratory drilling for multizone targets in first quarter 1997 on a 55,000 net acre Sheep Mountain leasehold in southeastern Montana.

Gulf Canada also participated in three successful horizontal oil wells on 5,800 net acres it holds in Divide County, N.D., and is preparing to install downhole pumping equipment. That area, however, is not a major focus of activity at present, a company spokesman said.

Outside the Williston basin, Gulf Canada has large leaseholdings in the Minnelusa of Wyoming, the Overthrust area of southwestern Wyoming and northeastern Utah, and the Thompson Canyon area of Utah.