NEWS Horizontal technology helps spark Louisiana's Austin chalk trend

Sonat Exploration Inc.'s 1 Temple 28 horizontal well in April 1995 extended Brookeland field's horizontal activity 5 miles to the east and opened Burr Ferry field in Vernon Parish, La. Photo courtesy of Sonat Inc., copyright Critt Graham.

A handful of companies paced by some of the most active operators in the U.S. are pressing the limits of horizontal technology to ramp up Cretaceous Austin chalk exploration and development (E&D) across Louisiana.

Most of the Louisiana chalk action so far has been confined to a few horizontal wells in two western parishes. Early results have been spotty, compared with the mounting record of Austin chalk successes in Texas.

But successes in Louisiana include an extension of the Austin chalk play in Brookeland field of East Texas. Horizontal activity also has opened chalk pay to development at a half dozen other fields, most notably at North Haddens and Burr Ferry fields in Vernon Parish and the Masters Creek area of Rapides Parish.

Companies find applications in Louisiana for lessons learned drilling horizontal wells to produce chalk intervals in Texas in Giddings, Pearsall, and Brookeland fields (see map, OGJ, Dec. 11, 1995, p. 40). Continuing advances in horizontal well technology are helping operators deal with deeper, hotter reservoirs in more complex geological settings that typify the chalk in Louisiana.

In mid-April, data compiled by Petroleum Information Corp. (PI) showed 23 active chalk horizontal wellsites in Louisiana, 21 of which were permitted in the previous 5 months. That included permitted wellsites where either drilling was in progress or operators had yet to file completion reports. PI data showed operators each year from 1992-95 at most drilled only three or four horizontal Austin chalk wells in Louisiana.

How 1996 is shaping up

Of reported 1996 activity, Sonat Exploration Co., Birmingham, Ala., was operating at 12 sites, the most among companies working in the Louisiana chalk.

Sonat had a four rig development drilling program under way in western Vernon Parish, filling in an area between two earlier discoveries that extended Brookeland field across the Texas-Louisiana state line. The company also had three rigs drilling horizontal chalk wells in the Texas portion of Brookeland.

Chesapeake Energy Corp., Oklahoma City, had four rigs active at Louisiana chalk drillsites in Louisiana, including three in Masters Creek. One of the rigs in Masters Creek was drilling the second lateral in the 1 Laddie James 7 well, Chesapeake's first in the field. Earlier, in the James well's first lateral, the company logged its best well test in its 6 years of existence.

Meantime, aggressive leasing at locations all along the Louisiana chalk trend has garnered hundreds of prospective drillsites. Sonat, Chesapeake, Union Pacific Resources Group Inc. (UPR), Fort Worth, and Oxy U.S.A. Inc., Tulsa, plan to step up drilling in the trend this year, and some substantial production gains are expected.

In addition, UPR and Amoco Production Co. in March announced formation of a joint venture (JV) that plans to use 3D seismic data in pursuit of the chalk in a 400,000 acre area in East Central Louisiana.

In all, 1996 is shaping up as a breakthrough year for Austin chalk E&D in Louisiana.

Improved technology

Since its introduction to the Austin chalk in Texas in the late 1980s, horizontal well technology has played a key role in keeping the play alive.

Of the 2,500 leases in the U.S. with horizontal wells drilled, more than 2,000 are in Texas (OGJ, Mar. 25, p. 66). Most of those are in the Austin chalk, but Texas operators also have drilled successful horizontal wells into the Buda, Georgetown, and Ellenburger.

Better horizontal drilling, completion, formation evaluation, and stimulation techniques have enabled operators to produce oil and gas from formations previously thought to be uneconomical. Most of the improved capabilities stem from better horizontal tools.

Horizontal drilling breakthroughs include dual powered mud motors and retrievable whipstocks, key links in the ability to drill wells with more than one horizontal lateral. Better geosteering tools have enabled operators to maintain horizontal wellbores in desired intervals by signaling bit positions downhole while drilling.

As a result, operators more and more are drilling multilateral horizontal wells targeting reservoirs at true vertical depths (TVDs) of 16,000 ft or more with bottomhole temperatures approaching 400^o F.

Companies working in the Louisiana chalk are testing the limits of expanded horizontal well capabilities.

Louisiana play origins

PI credits a successful reentry horizontal well in 1991 by Cliffs Oil & Gas Co., Houston, with touching off the horizontal well play in the Louisiana Austin chalk.

Cliffs' 1-A Martin well in Avoyelles Parish flowed 2,566 b/d of oil and 1.5 MMcfd of gas through an 18/64 in. choke with 3,880 psi flowing tubing pressure from a single 2,135 ft horizontal lateral. Drilled to 15,339 ft TVD with 17,103 ft measured depth, the well opened North Bayou Jack field in East Central Louisiana to horizontal development.

Sonat in July 1992 opened North Haddens field in western Vernon Parish with its 1-C Sonat Minerals, a single lateral horizontal well. Although the well produced only 53 b/d of oil and 370 Mcfd of gas, it showed better pressure maintenance than had been reported in other chalk wells, PI's Petroleum Frontiers publication reported.

UPR and Helmerich & Payne Inc., Tulsa, in February 1994 opened Lacour field in Pointe Coupee Parish with the first dual lateral horizontal well drilled in the Louisiana chalk play. The 1 O.B. Lacour flowed 1,654 b/d of oil, 734 Mcfd of gas, and 113 b/d of water but by mid-1995 had declined to marginal production rates.

Oxy and Sonat soon followed the Lacour well with two of the most significant wells drilled in the Louisiana chalk trend:

• Oxy in November 1994 completed 1-A Monroe horizontal well in Rapides Parish, opening Masters Creek field. The well flowed 6.6 MMcfd of gas, 2,162 b/d of condensate, and 2,941 b/d of water with 6,196 psi flowing tubing pressure from a single 4,425 ft lateral at 14,803 ft TVD.

• Sonat in April 1995 completed 1 Temple 28 horizontal well in eastern Vernon Parish, extending the Brookeland producing complex 5 miles east and opening Burr Ferry field. The well flowed 8.5 MMcfd of gas, 1,668 b/d of condensate, and 638 b/d of water through a 26/64 in. choke with 3,550 psi flowing tubing pressure from 3,880 ft and 4,226 ft laterals at 11,422 ft TVD.

Both wells established chalk production in areas between locations proven productive by earlier horizontal activity. But PI says the Monroe well is the more successful of the two, ranking as one of the strongest producers to date in the play.

The success of Oxy U.S.A.'s 1-A Monroe at a site midway between discoveries to the east and west brought increased attention to the Louisiana chalk, bolstering confidence of companies already working in the play, PI says.

Reflections of enthusiasm

PI data show fewer than 15 horizontal wells had been completed in the Louisiana chalk before yearend 1995. However, drilling plans formed this year reflect operators' new found enthusiasm for the Louisiana play.

Chesapeake has a four rig Louisiana chalk drilling program in progress, having added three rigs to the effort since the first of 1996. The company expects to have as many as 10 rigs working in the trend by the end of June 1997.

Aubrey McClendon, Chesapeake chief executive officer, said the company expects to complete the second lateral on 1 Laddie James 7 well in Masters Creek field early in May.

Also in Masters Creek, Chesapeake was drilling the 1 Cloud 9 and 1 Lyles 31 wells and in the South Leesville, La., area was drilling the 1 Rice-Land Lumber 33. Chesapeake expects to test those three wells by the end of summer 1996.

Sonat this year expects to drill about 45 operated horizontal Austin chalk wells, about 75% of them in Louisiana.

The company in mid-April was drilling the 1 Temple 19, 1 Sonat Minerals 36, 2 Sonat Minerals 36, and 1 Sonat Minerals 10 horizontal wells, all in Vernon Parish. Sonat aimed to fill in the area between 1 Temple 28 and 1 Sonat Minerals 1, a step-out 11 miles southeast of Brookeland field.

Bryan Simmons, manager of Sonat's Austin chalk business unit, said the company later in the year plans to begin drilling another Brookeland step-out in the Hurricane Branch area of eastern Vernon Parish.

Drilling to expand

UPR holds interests in the three Sonat wells in progress in Vernon Parish and has two company operated rigs working in the Louisiana chalk trend. The company by the end of summer 1996 expects to have four or five operated wells drilling in the chalk.

Also this year, the company expects to participate in 15-20 horizontal chalk wells in Louisiana. UPR, as operator, in mid-April had 16 rigs working in the Texas portion of the Austin chalk.

Other than Sonat development wells in which it holds interests, UPR in 1996 will concentrate on wildcats and step-outs, said John Vering, UPR's Austin chalk general manager.

Vering said UPR and Amoco could start reentering Tuscaloosa wells to drill horizontal laterals on chalk JV acreage as early as June. Amoco has contributed more than 250 sq miles of 3D seismic data to the project.

Partners hope the combination of extensive well control and 3D data will help them pinpoint sites in the area's complex geological setting for profitable chalk wells.

Oxy in mid-April was between operated wells, having just completed the 2-A Murry well offsetting 1-A Monroe. The company was moving a rig from 2-A Murry to a site in Rapides Parish, where it planned to spud last week the 1-A Exxon Minerals dual lateral well in Rapides Parish.

Ed Henley, Oxy's Louisiana and Mississippi team leader, said there is a good chance the company later this year could add a second rig to its Louisiana chalk drilling program. Oxy by yearend 1996 expects to spud one or two more operated Louisiana chalk tests.

Production outlook

Since starting production from the chalk in Rapides Parish by completing 1-A Monroe in November 1994, Oxy has placed one other Louisiana chalk well on stream.

The company's 1-A Murry, 11/2 miles east of the Monroe discovery, in late January 1996 flowed 2,238 b/d of oil, more than 9.8 MMcfd of gas, and 8,039 b/d of water from two horizontal laterals in a chalk interval at 14,834 ft TVD. The well's measured depth was 20,205 ft.

Henley in mid-April said the 1-A Monroe had cumulative production of 1.2 bcf of gas and 380,000 bbl of oil and the 1-A Murry 700 MMcf of gas and more than 200,000 bbl of oil.

In a testament to the rugged downhole environment in Louisiana chalk intervals, Henley said Oxy on the 2-A Murry well lost its geosteering tool because of excessive heat and drilled the last 800 ft of lateral blind.

"We measured bottomhole temperatures as high as 370^o F. in the well," he said.

With only two wells producing from the Louisiana chalk, Henley said, it's too early for Oxy to form solid conclusions about the play's economics.

While the Louisiana chalk's extreme temperatures and high pressures are testing the limits of downhole horizontal tools, the reservoirs look good. "The potential of the chalk in Louisiana is at least equal to that of the chalk in Texas," he said.

Among the leaders in the Louisiana chalk play, Sonat expects the biggest production increase in the trend.

Sonat last year produced 3.6 million bbl of oil equivalent (BOE) from Austin chalk wells in Texas, up from about 100,000 BOE in 1992. Because of the high rate of production decline in chalk wells, Simmons estimated about two thirds of the company's chalk output each year comes from current year drilling activity.

Based on its expectations of operated and nonoperated chalk drilling in 1996, Sonat this year expects to produce about 6.3-6.4 million BOE from its chalk leases. With three fourths of its chalk drilling in 1996 to occur in Louisiana, he estimates about 3 million BOE of that total will be produced in the state.

Banking on success

Chesapeake, more than most companies heavily involved in Louisiana chalk drilling, is banking on the success of the play.

McClendon said Chesapeake was founded specifically to search for oil and gas in fractured carbonate reservoirs like the Austin chalk by integrating new drilling and completion technology.

"Our whole reason for being is for a play like this," he said of the Louisiana chalk. "It's perfect for us."

Chesapeake's growth vouches for the credibility of its strategic thrust.

In 6 years of existence, the company has built a 250,000 acre leasehold in Giddings field of Texas, with average net interest of about 45%. Last year on the acreage, Chesapeake produced about 400 MMcf of gas equivalent (MMcfe).

The company as yet has no production in the Louisiana chalk, but the future there looks promising.

Chesapeake has assembled a leasehold in the Louisiana chalk play consisting of 650,000 net acres and is committed to boosting that total to 1 million net acres by yearend 1996, all owned 100%. Within the acreage already assembled are more than 200 penetrations of the chalk by wells drilled to the Cretaceous Tuscaloosa.

"So there's less risk in what we're doing, in that we know the formation is there, we know it holds oil and gas," McClendon said. "The questions is, how efficiently can we produce those reserves?"

Total spending on the acreage position is expected to amount to about $65 million. Based on spacing of 2,000 acres/well, a 1 million acre leasehold would provide Chesapeake an inventory of about 500 chalk wellsites.

By comparison, UPR in 1995 drilled about 130 grassroots Austin chalk wells, mostly in Texas, and reentered another 50 wells in the play. All told, the company at yearend 1995 operated Austin chalk leases producing 480 MMcfd of gas, 40,000 b/d of oil, and more than 100,000 b/d of water.

Vering estimated chalk production last year accounted for about one third of UPR's revenue and production.

If the Austin chalk already is a big part of Chesapeake's activity, effects of Louisiana chalk production will be magnified by the company's 100% interest in its acreage there, McClendon said.

Chesapeake Energy Corp.'s 1 Laddie James 7 well cut the deepest productive Austin chalk strata reported in Masters Creek field, Rapides Parish, La. The well is to begin commercial production by July. Photo courtesy of Chesapeake.

Masters Creek

Chesapeake plans to begin Louisiana chalk production by July 1996, when it expects to finish installing a pipeline and gas treating facilities for the 1 Laddie James 7 well in Masters Creek field.

PI reported the well in first quarter 1996 flowed 2,900 b/d of oil and 11.1 MMcfd of gas through a 28/64 in. choke with 6,750 psi flowing tubing pressure from a horizontal lateral at 15,200 ft TVD. That is the deepest Austin chalk production listed for Masters Creek.

Also in Masters Creek, UPR is near start of production at another significant well, 1-A LaBoKay Corp.

Vering said the well has been tested and is awaiting a pipeline connection. Test results are tight.

PI's Petroleum Frontiers reported UPR and partners drilled 1-A LaBoKay to 14,750 ft TVD, with 21,400 ft measured depth and a single 6,737 ft south oriented lateral.

"This would represent the longest horizontal well bore in Louisiana and one of the longest ever drilled," PI said.

UPR is planning a possible offset to the LaBoKay well later this year.

The company also is developing plans to install a 100 MMcfd cryogenic gas processing plant west of 1-A LaBoKay, along with pipelines to gather production from wells in the Masters Creek area and eastern Vernon Parish. Wells east of Masters Creek could be included in the gathering system, depending on the timing with which production comes on stream.

UPR is gathering production from Louisiana chalk wells in Vernon Parish through an extension to its 100 MMcfd Brookeland gas processing system.

UPR-Amoco chalk JV

UPR and Amoco at last report were continuing to lease acreage in their 400,000 acre JV area in Point Coupee, East Baton Rouge, West Baton Rouge, and Livingston parishes.

The joint acreage is being assembled for a 50-50 venture formed in March by the two companies to explore the Austin chalk.

UPR operates the JV because of its extensive experience in drilling, completing, and producing horizontal wells. The company in May 1995 drilled its 1,000th horizontal well in the Austin chalk of Texas and at yearend 1995 had participated in more than 1,100 horizontal holes.

Amoco contributed a 75,000 acre leasehold held by production from Tuscaloosa wells, as well as extensive well control information. The company also contributed 3D seismic data to the JV, including some still being generated, over several Tuscaloosa fields in South Louisiana.

Included in the latter total are 60 sq miles of 3D data in Port Hudson field, 100 sq miles in Judge Digby, 120 sq miles in False River, and 75 sq miles in Morganza.

"Obviously," Vering said, "one of the pluses we have in our JV with Amoco is the significant chalk control on the acreage from all the Tuscaloosa wells."

Another big plus is the significant acreage position established by Amoco's Tuscaloosa holdings.

In addition, a key in some JV areas could be Amoco's extensive 3D seismic coverage, although partners haven't fully evaluated the data through the chalk intervals.

Vering said a cursory look at the chalk 3D data indicates much more complex faulting, as expected, but in some surprising directions partners hadn't anticipated.

"We're relating that back to some interesting well performances in some areas in Texas," he said, "specifically in the deep Giddings area."

Plan of attack

Vering said UPR and Amoco first on JV acreage will try reentering some vertical Tuscaloosa wells and sidetracking horizontal laterals out of the older wellbores.

"If we can find the right mechanical configurations and in the right place to test the right concepts, that will be a great value to us," he said. "We're going to take advantage of that whenever we can."

With grassroots horizontal chalk wells in the area expected to cost $4-6 million, partners estimate reentering useful vertical wells on JV acreage could save as much as $2 million/ well.

Scott Young, resource manager of Amoco's southeast business unit, said the JV expects to target chalk intervals at 15,000-16,500 ft. Joint venture wells typically will target the basal member of the chalk, a 200 ft thick zone, in many places at the bottom of 1,000 ft chalk formations.

At those depths, partners expect to find temperatures of a little more than 300^o F., within the capability of modern geosteering tools. Geothermal maps of the area indicate partners should encounter downhole temperatures of no more than 330^o F., Young said.

UPR and Amoco are enthusiastic about the JV's potential but won't have answers to some questions until they begin drilling chalk wells.

Most Tuscaloosa wells in the JV area had oil and gas shows in the chalk while drilling. Yet partners are unsure about whether 3D seismic data will be useful in determining precise locations of chalk fractures.

Young said the main factor expected to control economics in the area is the ability to control well costs.

"If we can consistently get the wells down at a cost of $4-5 million/well, we probably have a pretty good project," he said. "If costs run higher on average, it could be over before it starts."

As good as any in Texas

UPR and Amoco expect operating improvements as the venture moves along the learning curve to trim some costs. Even if costs at first are too high, partners might be willing to stick with the program a while to see if they can lessen costs to an acceptable range.

"If UPR can meet some key mechanical challenges and keep the costs down, we think there's better than a 50% probability we'll find fractures similar to what we've seen in Giddings and the potential can be very good," Young said.

"We've never tested fractures in this area, but there has been a lot of tectonic activity, so we feel this area probably is as good as any of the best areas that we've seen in Texas."

Partners envision chalk wells in the area as having initial production rates equal to the Cliffs' 1-A Monroe well with a 1,000:1 GOR, Young said. Reserves are expected to average 800,000 to 1 million BOE, with high initial production rates, followed by rapid declines. Companies expect payout of their investments in about 1 year, one of the chalk's main strengths.

Depending on how fast joint leasing progresses in the JV target area, drilling could begin as early as June on the acreage. If the pace of leasing is slow, partners could elect to put off drilling until the second half of the year.

Young said crews should need 75-90 days to drill a single lateral chalk well in the area. If the development turns out to be an oil play, as partners expect, they will be able to produce individual wells into tank batteries.

In that case, Young said, "we think we'll be able to bring production on virtually as fast as we can drill the wells."

If that holds true, partners could begin to see some production by early 1997.

Copyright 1996 Oil & Gas Journal. All Rights Reserved.