Alan Petzet
Chief Editor-Exploration
A protracted exploration effort in the Tucumcari basin of northeastern New Mexico for more than a decade may move off high center soon.
The news comes as OGJ publishes its annual worldwide Exploration & Development Frontiers report (see p. 48).
Shale plays with horizontal drilling and multistage fracturing dominate these days, but the Tucumcari play involves vertical wells and probably tight gas sands with one big difference: the presence of helium.
New Mexico, which produces hydrocarbons in four northwestern counties, four southeastern counties, and the Raton basin, is hosting the first gas production from a Tucumcari basin play that likely will add several more counties to the producing column. The timeline is still a bit unclear, however.
Play evolution
Shell Western Exploration & Production has been exploring New Mexico for several decades and drilled some of the state's deepest wells in a search near Albuquerque that didn't lead to production.
A group of independent oil and gas companies drilled an exploratory well in 23-11n-23e, Guadalupe County, several years ago but didn't perforate due to disagreements over completion procedures and economic viability (see map, OGJ, Feb. 23, 2009, p. 32).
Shell assumed operation and in 2007-08 tested the well, in Tucumcari's Cuervo subbasin northeast of Santa Rosa. Since then Shell has drilled four more wells nearby.
People who hold economic interests in the region say Shell has spent upwards of $100 million on its overall project. Shell hasn't commented but is known to hold a large spread and still be leasing.
Shell has mostly succeeded in keeping a lid on the specifics of what it has encountered in the basin. Another lessee has asked the state oil and gas agency to direct Shell to release information on its wells according to state regulatory requirements.
A hearing initially set for December 2010 was postponed several times and at this writing on Mar. 30 was scheduled for Apr. 14.
Shell filed initial reports in 2008 and in December 2010 made available electric logs that appear to indicate large thicknesses of numerous gas-saturated sands of Pennsylvanian age at 9,000 ft to as deep as 14,410 ft.
Short-term outlook
The protracted and sparse nature of exploratory drilling at Tucumcari has attracted numerous lessees that hold at least several hundred thousand acres, almost none of it federal land.
Leasing has touched Guadalupe, San Miguel, Harding, Quay, De Baca, Roosevelt, Curry, and Mora counties. Shell has hinted at drilling plans in Curry and Quay counties. Still, the basin has no heavyweight gas pipeline outlet.
Shell has built a production station of sorts and has begun trucking gas and reporting volumes to the state.
Low natural gas prices have led many US companies to redeploy spending to liquids plays, but the nearly 2% of highly priced helium in Tucumcari gas could improve economics considerably at scale.
The exploration cycle
It's not often that a so-called mature area such as North America yields hydrocarbon production from a new basin. Other recent examples include the Central Utah thrust belt and the Boise basin that is about to become Idaho's first producing area.
In the case of New Mexico, Shell's exploratory efforts go back to the 1980s at least.
Then Ronald F. Broadhead, geologist at the New Mexico Bureau of Geology and Mineral Resources at Socorro, studied Cuervo and other so-called "elevator basins" or troughs of eastern New Mexico in the 1990s. He published a series of articles on his findings in Oil & Gas Journal (OGJ, Jan. 8, 15, and 22, 2001), heightening interest among explorers.
New federal efforts such as "use it or lose it" leasing policies short-circuit economic factors and ignore lease provisions that already reflect whether an area is prone to production or, like Tucumcari, could take a decade or more to bring to commercial status. Such policy won't serve the industry, the states, or the public well.
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