AMOCO REDEVELOPING TREND IN SOUTH LOUISIANA

A.D. Koen
Senior Editor-News

A Portion of South Louisiana's Tuscaloosa Trend (137135 bytes)

Amoco Production Co. has begun a redevelopment program in the upper Cretaceous Tuscaloosa gas/condensate trend that could spread to 10 South Louisiana fields.

The proposed 20-25 well deep drilling program, based on 3D seismic data, could increase gas recovery in redeveloped fields by about 25% to about 2.5 tcf, halting a production decline of about 20%/year.

But project activity could be cut short if other working interest and royalty owners aren't willing to revise unitization rules that have allowed most fields in the trend to be developed as clusters of distinct geographic units, each in the hands of different operators.

Amoco believes some existing geographic Tuscaloosa units should be combined into larger units, still geographically based but with the freedom of operating rules afforded by reservoir-wide unitization.

Scott Young, Tuscaloosa resource manager of Amoco's Southeast U.S. business unit, said not many companies have the technological capability and financial strength needed to carry out the deep, costly redevelopment program. Amoco believes it is best suited to carry out the project because of its dominant leasehold in the trend.

Young said the time to act is short because depletion of Tuscaloosa reservoirs will make more drilling impossible in as many as three of five Tuscaloosa redevelopment opportunities. That's because redevelopment focuses on slightly deeper Tuscaloosa intervals than were targeted when primary development of the trend began in earnest after passage of the Natural Gas Policy Act of 1978.

If lack of cooperation from other interest owners thwarts Amoco's efforts to revise Tuscaloosa field unitization rules, most wells in the trend likely will become uneconomic to produce within 5-8 years.

REDEVELOPMENT STRATEGY

Several factors led Amoco about 4 years ago to begin considering ways to redevelop fields it operated in the heart of South Louisiana's Tuscaloosa trend.

First, the company held controlling interests in some of the trend's better fields such as Port Hudson and Lockhart Crossing. But even Amoco's Tuscaloosa production had fallen steadily since peaking at about 300 MMcfd in 1986.

Based on pore volume calculations, Amoco knew its Tuscaloosa fields were nearing the end of their collective productive life. The choice was either to let the fields deplete or make an investment to keep them on stream.

Amoco was nudged closer to a redevelopment decision in October 1993 when it boosted its position in the trend by acquiring Chevron Corp.'s former interests in Judge Digby, False River, and Profit Island fields through a trade of leases with Pennzoil Co. Pennzoil had acquired the Chevron interests in settling a dispute.

Today, Amoco holds about 40,000 acres in the trend through production, with interests averaging 80% and operates seven of the 10 fields earmarked for redevelopment.

Gross production from the 10 fields in December 1994 averaged 200 MMcfd of gas and 11,000 b/d of condensate from 55 wells. By comparison, gross production of the seven Amoco operated fields in December amounted to 190 MMcfd of gas and 10,900 b/d of condensate from 47 wells.

GEOLOGIC SETTING

To devise a redevelopment strategy, Amoco multidiscipline teams reviewed and integrated existing technical data, then combined that information with new 3D seismic data to help improve the accuracy of its regional Tuscaloosa geologic model.

Among the technical information studied were 2,200 line miles of reprocessed 2D seismic data. Amoco also digitized downhole data from more than 600 Tuscaloosa wells, including 300 wells in fields targeted for redevelopment, and applied sequence stratigraphy techniques in its study of the Tuscaloosa.

"Quite often, to understand inconsistencies in a specific field, it's necessary to understand the broader geologic setting," Young said. "So rather than looking at each of the fields independently, we looked at the trend as a whole and then fit each field within the regional geology."

Young said Amoco's basic idea is no different from plans to redevelop other fields. However, the Tuscaloosa trend's depth and geologic complexity call for a broad based redevelopment program.

As presently conceived, Amoco plans to redevelop Tuscaloosa fields sequence, stepping up activity in one field at about the same time it is wrapping up operations in another. Transfers from field to field likely will not be smooth, with overlapping activity or delayed start-ups, depending on circumstances. But Amoco expects to continually reduce redevelopment costs through constant technologic improvements as the project progresses.

"Lower cost is very important in terms of extending 3D technology as far as we can," Young said. "If we can cut the seismic cost in half in a given area, it might suddenly look economic."

Similarly, he said, lowering drilling costs could help lower a given prospect's economic threshold and might enable Amoco to add a few wells to the program. The company also might try sidetracking some well bores in attempts to tap small reservoirs nearby that might otherwise be uneconomic.

3D ACTIVITY

While Amoco continues trying to build a consensus for revising field rules, it has started redevelopment work at drillsites where unit reorganization is not an issue.

Because of long lead times involved, collecting, processing, and interpreting 3D seismic data have been the focus of Amoco's early Tuscaloosa redevelopment activity By mid-February, the company had:

Finished interpreting a 60 sq mile survey over Port Hudson field.
Started collecting data on a 100 sq mile survey of Judge Digby field that overlapped onto nearby Moore Sams field.
Authorized a 60 sq mile shoot of False River field.

Amoco must survey large surface areas with 3D data to adequately cover Tuscaloosa reservoirs at depths of 16,000-25,000 ft.

Young said Amoco wants to pace the 3D surveys so each is done just in time to maintain a continuous drilling program.

"We hope to be finished shooting and recording the Judge Digby survey by July, then go into processing and have our interpretation complete in fourth quarter 1995," Young said. "Then, as we get 60-80% of the drilling out of the way in Port Hudson field, we can get ready to transfer those rigs over to Digby."

In any case, no more drilling is planned until the Judge Digby-Moore Sams 3D seismic data are fully processed and interpreted.

"Very rarely would we consider drilling another Tuscaloosa redevelopment well without a 3D survey," Young said. "The risks are so great it doesn't make any sense not to follow with the 3D."

Depending on the number of drillsites it expects to identify with Tuscaloosa 3D surveying, Amoco estimates that collecting the seismic data will add $400,000-600,000/well to redevelopment costs. With the typical Tuscaloosa redevelopment well expected to require 90-160 days to drill and complete at a cost of about $8 million, Amoco reasons the relative cost of 3D seismic data is small.

"Quite frankly, we use the 3D as an insurance premium," Young said. "Each well has to be in the best place for peak efficiency."

DRILLING ACTIVITY

So far, company officials have authorized seven redevelopment wells, including five in Port Hudson field, which Amoco operates as a reservoir-wide unit with a 100% interest.

Of the 10 fields Amoco has proposed to redevelop, Port Hudson is the most prolific. With fresh 3D data in hand on Port Hudson, Amoco hopes to use redevelopment there to show interest owners in other fields the benefits of allowing the proposal to advance.

Amoco expects to keep two or three drilling rigs busy for the duration of the redevelopment program_2-3 years if plans advance as the company hopes. A program of more than 20-25 wells and more than 3 years will signal economic success.

Helmerich & Payne Inc. (H&P), Tulsa, Amoco's primary Tuscaloosa redevelopment drilling contractor, has assigned Rigs 72 and 73 to the project. Amoco also has moved in for the program Rig 182 of Parker Drilling Co., also of Tulsa.

One of the seven funded wells, 8 Brown, has been completed in Morganza field, where it cut 110 ft of net pay. The 19,000 ft well was sited on the basis of decade old, wide line, 2D seismic data reprocessed with 3D techniques.

Young said the 2D data on Morganza indicate two more possible redevelopment well locations. However, drilling of those wells depends on whether Amoco gets cooperation on unitization issues.

"If we can't get the right rules, they're history," he said of the drillsites.

Three more redevelopment wells have been spudded:

H&P Rig 73 in mid-February had reached more than 14,000 ft with the 4 Oliver well in Profit Island field.
H&P Rig 72 had reached 14,000 ft on the 5 Georgia Pacific well in Port Hudson field.
Parker's Rig 182 had reached 4,000 ft on the 3 Bickham well, also in Port Hudson.

Amoco also had authorized spending to drill the 6 Georgia Pacific, 4 Bickham, and 5 Pennington wells. Those wells are expected to spud in Port Hudson field later this year.

The extent of Tuscaloosa redevelopment activity after that is uncertain.

"Once we jump out of Port Hudson, we lose free rein of where we place wells," Young said.

WELL BORE DESIGNS

Because most of the Tuscaloosa intervals targeted for redevelopment are deeper than zones tapped originally, Amoco has included big pipe and small pipe well bore designs in its proposed drilling program.

Big pipe well bores will provide extra casing strength at sites where Amoco expects to drill into high reservoir pressures or high pressure differentials when drilling out of previously produced intervals to deeper virgin zones. A typical big pipe Tuscaloosa redevelopment well bore is to include a string of 11 3/4 in. intermediate casing, with 7 in. casing set to total depth.

Small pipe programs based on 9 5/8 in. intermediate casing with 5 in. casing set to total depth, are to be used at sites where drilling risks are considered small.

With the cost of small pipe programs expected to average about $6 million - $2 million less than a typical big pipe well bore-Amoco intends to use as many small pipe programs as prudence allows.

"There may be one or two wells where we have to come up with more exotic drilling programs to get an extra string of casing to TD," Young said. "But depletion generally is going to create huge problems for us. That's why it was so important to know where we were headed.

"Knowing when to set casing or change mud weights in the Tuscaloosa is critical. If a producer can't control his drilling programs to the extent that he can avoid unexpected interruption of other problems, the Tuscaloosa is a prohibitively expensive play."

NEED TO REORGANIZE

Many in the U.S. upstream oil and gas industry believe the Tuscaloosa was discovered and developed before there was adequate technology to properly exploit the trend.

As Young explains, the Tuscaloosa is so deep and its deposition so chaotic, many producers a decade ago were able to site successful wells only by playing off 2D seismic "ghost images" of the formation's largest subsurface features.

In such an environment, success had little to do with whether hydrocarbons were present at a given site and much to do with an operator's technical expertise and knowledge of regional geology.

Today, the Tuscaloosa's growth potential is based not only on advanced 3D seismic capabilities but on the ability as well to drill and complete difficult, deep wells.

Because of the technical requirements and the high cost of drilling and completing Tuscaloosa wells, Amoco has concluded a major company must take charge of redeveloping the trend. Amoco's dominant leasehold in the trend makes it the only major capable of leading redevelopment.

Young said Amoco aims to carry out fully the proposed Tuscaloosa redevelopment plan, "but it's got to be economical, and as things now stand, it's not." With more gas prospects in North America than it can drill, the company must invest in the best available prospects-if not in the Tuscaloosa, then elsewhere.

Amoco worries that its recent Tuscaloosa activity will convey the mistaken impression to other interest owners that a massive land play is under way in South Louisiana rather than a limited redevelopment project. But Tuscaloosa interest owners not willing to accept Amoco's plan aren't likely to be offered a profitable alternative by anyone else, sources say.

"Right now, we're at a stage where there's a 1-3 year window in which some of the deeper targets will be economically drillable," Young said.

'If we can't alter units or the ways they function in the trend or if other interest owners fight long enough over shares of the increased production and don't allow the economics of this deal to work, the number of wells we can drill and their effects will be greatly limited, and those interest owners will be the big losers.

"If not us, no one. If not now, never."