Mark Stephenson, John Cox, Pamela Jones-Fuentes
Paramount Petroleum Co.
Houston
By applying the latest in 3D seismic and computer aided exploration and production (CAEX) technology, small and mid-size independents are changing the methods by which fields are discovered and profitably developed.
The combination of 3D and CAEX has, in many cases, altered oilfield economics.
Nuevo Energy Co.'s North Frisco City development-located in the updip Jurassic Haynesville trend of Southwest Alabama-offers a case in point, The 3D technology employed at North Frisco City produced an accurate, detailed picture of the subsurface. Ultimately it more than doubled the drilling success rate over that of a nearby, closely related field in which 3D was not used.
Further, all the needed seismic information at North Frisco City was present from the start of development, eliminating the need to permit, shoot, and process more lines.
This accelerated the field's development cycle and cash flow, in turn improving such economic factors as return on assets and return on investment-a significant advantage for Paramount Petroleum Co. and the other field partners, Nuevo, Howell Petroleum Corp., Rimco, GEDD Inc., Shore Oil Co., and the field operator, Torch Operating Co.
Under a management agreement, Torch provides technical and financial services to Nuevo and Paramount.
As a result, Paramount--an independent until acquired by Nuevo in February 1992-has purchased a second CAEX workstation and is using 3D technology elsewhere in the play to develop another field and explore a prospect. Various advantages obtained with the use of 3D technology at North Frisco City field are discussed in the following case study.
COMPLEX GEOLOGY
Founders of Paramount launched the Haynesville play in 1987 with the accidental discovery of Frisco City field in Monroe County, Ala. (Figs. 1, 2).
An initial well was drilled there to test Jurassic Smackover, the area's dominant play. An unexpected, highly prolific interval, the Frisco City sand, was found in the overlying Lower Haynesville formation.
Well information gained from development of the Frisco City field led to a then-maverick hypothesis regarding the area's lithology and subsurface structure.
The new model-since confirmed by seismic studies and well data at North Frisco City and elsewhere-proposed that the Jurassic age Norphlet, Smackover, and Buckner sequences pinch out on the flank of the Paleozoic basement structure. This igneous and metamorphic basement rock forms the core of the anticlinal structure,
Throughout most areas of the Gulf Coast, the Buckner anhydrite vertically seals the Smackover formation. But in this case the basement rock rises above the depositional limit of the Buckner. The pinchout of the Buckner anhydrite seal allows hydrocarbons generated in the Smackover to migrate into the Frisco City sand. The overlying Upper Haynesville shales vertically seal this sand, providing the basis for the current play.
The Frisco City sand was deposited by braided streams sourced from an alluvial fan system. The sand is thin or absent on top of the basement highs and thick on the flanks (Fig. 2), This resulted from the sand being deflected off the highs, creating a highly complex depositional pattern.
After the Frisco City field development, Paramount became the Haynesville play's most active prospect generator. Paramount discovered West Falco, North Rome, and North Frisco City fields in 1989, 1990, and 1991, respectively.
The West Falco and North Rome discoveries extended the play to a similar localized delta system 50 miles to the southeast. But North Frisco City field-the star performer-was found just two miles from the original Frisco City discovery.
Paramount generated the North Frisco City prospect off extensive knowledge of the region's geology and state of the art, proprietary 2D seismic shot through a 1984 well drilled on the lease (Fig. 3). The 1984 well found oil shows in the Frisco City sand, but completion was not attempted because the area had no other production from that interval.
36 SEISMIC ACQUIRED
Torch's 1 Paramount-Sigler 25-6 discovery well at North Frisco City was completed in March 1991. It encountered 92 net ft of oil pay, flowing 832 b/d of oil and 1.03 MMcfd of natural gas through a 14/64 in. choke with 2,410 psi flowing tubing pressure-good but not remarkable for the area.
The project's partners considered acquiring a small 3D survey over North Frisco City field. Factors driving the decision included the Haynesville's stratigraphic complexity, the highly irregular, unpredictable deposition of Frisco City sand, and dry holes encountered at nearby Frisco City.
Development drilling at Frisco City had thus far resulted in one additional producing well and three dry holes. The aggregate dry hole cost approached $1.5 million and had a significant impact on the small field's profitability,
The cost for onshore 3D seismic had been declining for several years. Permitting, shooting, and processing a 3D survey of approximately 3 sq miles at North Frisco City would now cost less than $200,000-less than half the area's typical $450,000-475,000 dry hole cost.
The numbers also compared favorably with 2D. Acquiring three 2D lines would cost about $120,000 for a small fraction of the information that would be obtained with 3D. Shooting 3D and using a CAEX workstation would allow the seismic data set to be treated as a solid earth volume rather than as individual lines.
This would allow arbitrary lines to be drawn throughout the survey area to quickly test interpreters' ideas at near-zero incremental cost. By comparison, when developing other Haynesville and Smackover fields, the project's partners had typically found it necessary to shoot additional 2D lines. They determined that at North Frisco City additional lines could push the total cost for 2D above $200,000 and add months to the field development process.
Permitting for the 3D survey began in June 1991 and took about four months due to the area's relatively dense culture. The survey was shot in October, processed the following month, and delivered to the partners at the beginning of December 1991.
CAEX TECHNOLOGY CHOSEN
Meanwhile, Paramount and Torch had yet to make a final decision regarding CAEX workstation technology. The two companies performed a manual interpretation using about 50% of the 3D data during an intensive two week period in December (Fig. 4).
The location for an initial North Frisco City development well was then chosen based on the manual interpretation. The I McCall 25-7, spudded in mid-February and completed in early March, encountered 150 ft of net pay. It flowed 2,064 b/d of oil and 2.2 MMcfd of gas through a 24/64 in. choke with 2,087 psi flowing tubing pressure.
The partners selected a second development well location also based on the manual interpretation. However, Paramount and Torch were now nearing the end of their CAEX technology evaluation process.
In mid-March, the partners provided a CAEX technology vendor with the North Frisco City 3D survey. As a demonstration, the vendor interpreted the 3D seismic, confirming the proposed well location.
The demonstration convinced Paramount and Torch to jointly acquire an advanced 2D/3D workstation system. Deciding factors included the system's ability to (a) speed the interpretation process and (b) make interpretations more thorough by allowing the use of arbitrary lines and taking into account well logs and other geological information.
Also, Paramount and Torch were by now convinced that 3D technology would be a pivotal factor in the ability of E&P companies to compete in the 1990s.
Therefore they saw the CAEX workstation purchase as an important strategic move as well as a tactical advantage' for their current projects.
The well location confirmed by CAEX interpretation was drilled and completed in June. The 1 Lancaster 30-5 flowed 3,101 b/d of oil and 3.4 MMcfd of gas through a 34/64 in. choke with 1,855 psi flowing tubing pressure.
APPLICATION OF CAEX
Paramount and Torch took delivery of the CAEX workstation system in June 1992. It provided an immediate manyfold productivity improvement, enabling them to interpret the entire North Frisco City 3D data set in two days versus the one to two weeks required to manually interpret half the data.
Further, using the workstation improved the quality of the interpretation and significantly increased management's confidence in the proposed drilling locations (Fig. 5).
As an example, the interpretation team was now able to generate arbitrary lines through the producing wells and proposed locations (Fig. 5). It thus took only minutes to tie the seismic directly back to the wells, allowing comparisons with synthetic seismograms and the team's existing two dimensional models. Also, synthetics from the sonic logs were quickly and easily compared to the actual reflection responses in the same wells.
The first well interpreted entirely on the CAEX system, the 1 McCall 25-9, was the highest well drilled to date on the feature. Completed in July 1992, it proved 211 ft of oil column and came close to setting an Alabama state production record. The well flowed 3,559 b/d of oil and 3.4 MMcfd of gas through a 34/64 in. choke with 1,695 psi flowing tubing pressure.
The project's partners have since drilled two more North Frisco City wells based on the 3D data and CAEX. One, the 1 McCall 30-13, completed in August, flowed 3,060 b/d of oil and 3.9 MMcfd of gas through a 34/64 in. choke with 1,555 pounds of tubing pressure. The other, the 1 Sigler 25-11, completed in early October, flowed 3,007 b/d of oil and 3.3 MMcfd of gas through a 26/64 in. choke with 1,740 pounds of tubing pressure.
The CAEX workstation added substantial value to the North Frisco City development in two ways, significantly improving the field's economics:
- Better drilling and production decisions resulting from higher quality interpretation.
The CAEX workstation used all the available 3D seismic data and could optionally take into account other data such as well control. 3D plus CAEX produced very high resolution images providing substantial accuracy and detail. The Paramount-Torch interpretation team using the workstation was able to generate arbitrary lines, rapidly autopick horizons, and edit maps, enabling the team to quickly test ideas, refine the model, and improve its understanding of the play.
Impact on production and the field's economics:
The partners have achieved 100% development drilling success, compared with 40% in a nearby field without the use of 3D. High resolution images have enabled the partners to maximize recovery by gaining more oil column-confidently drilling higher on the structure while avoiding the dry, sand-devoid summit areas.
- Accelerated development of the field.
Shooting 3D at North Frisco City has thus far prevented the need to acquire additional seismic data. The partners estimate that the "data acquisition to oil production" cycle has thereby been shortened by several months and that production has been "ramped up" much more quickly as compared with development based on 2D seismic. Also the CAEX workstation dramatically speeded the interpretation team's hypothesis testing and modeling, further accelerating development of the field.
Impact on production and the field's economics:
Paramount and Torch believe that if 2D rather than 3D had been employed at North Frisco City, development there would currently lag by at least two wells. This would translate into lost production at the wellhead of at least 40,000 bbl/month of oil and 40 MMcf/month of gas. Therefore the use of 3D has provided the project's partners with accelerated cash flow and increased return on investment and return on assets as compared with 2D. For the two partners that are public companies-Nuevo and Howell-such factors appear to have contributed to a rise in share price, increasing the companies' value to their investors.
CONCLUSION
In a project characterized by complex geology, an independent E&P company made its first use of 3D seismic and CAEX.
The combination significantly improved the project's development and production economics as compared with a nearby field in the same play where 3D technology was not employed.
As a result, Paramount has quickly acquired a second CAEX workstation, shot 3D surveys over two more properties in the play, and plans to expand its use of 3D technology as a competitive advantage throughout the 1990s.
ACKNOWLEDGMENTS
The authors express their appreciation to the following individuals who have contributed to the successful development of North Frisco City field: Sam Wilson, Torch Operating Co.; Bryan Richards and Dave Burkett, Howell Petroleum Corp.; Guy Joyce, Rimco; Jim Harmon, GEDD Inc.; John Bush, Paramount Petroleum Co.; and Bob Gaston, consulting geophysicist.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
