LOW FINDING COSTS CALCULATED IN MISSISSIPPI'S TUSCALOOSA, FRIO

Sandra G. Dowty, Jack S. Moody
Mississippi Office of Geology
Jackson, Miss.

A recent study conducted by the Mississippi Office of Geology examined oil and gas finding costs in southwestern Mississippi for the period from 1986 through 1990 (Fig. 1).

The formations of interest were the Upper Cretaceous Lower Tuscaloosa formation and the Oligocene Frio formation.

The model incorporated the following financial considerations for exploratory activity: seismic data acquisition, geologic expenses, leasing and legal fees, and drilling costs. Average drilling and completion costs were also assigned to the development wells.

The finding cost formula divided the total exploration and development costs by the recoverable reserves.

Reserves were multiplied by a 75% net revenue for the Tuscaloosa and 80% for the Frio leases to account for royalty interests and severance taxes. No field operating expenses were included.

The method described above for arriving at these finding costs was published by Culbertson and Miller.1

TUSCALOOSA DEVELOPMENT

Historically the Tuscaloosa formation accounts for 26% of all hydrocarbons produced in Mississippi (Fig. 2).

Since the 1940s, the Lower Tuscaloosa trend has been an exploration target. The first discoveries at Brookhaven and Mallalieu fields in Lincoln County revealed major reserves on large structural anomalies initially defined by gravity data.

A period of limited success followed until the late 1950s, when Little Creek field (1958) and McComb field (1959) were established.

Most of the fields in the Tuscaloosa trend exhibit minimal structural closure and are considered to be "structurally modified stratigraphic traps." This stratigraphic nature accounts for smaller reservoir sizes compared to those associated with deep-seated salt structures. 2

Shell's 1981 discovery of Olive field, through the use of seismic stratigraphy, established that subtle stratigraphic traps could be discerned from modern seismic data. This concept allowed geophysicists to delineate the sand bodies in wildcat regions with greater success rates; activity moved away from the traditional boundaries toward new areas of little well control.

Exploration for these traps now dominates the trend with the Stringer member being the primary drilling objective.

The area of activity consists of Wilkinson, Amite, Franklin, Lincoln, and Pike counties. The depths of recent discoveries range from 11,000-13,500 ft.

The Stringer member of the Lower Tuscaloosa in this area consists of fluvial point-bar deposits. Deltaic and marginal marine facies are also present.

Thanksgiving field, the most significant discovery for the study period, is a classic example of a shaleout in three directions against regional dip.

The sand pinches out into an abandoned shale filled channel. This channel plug provides the lateral seal when located on the updip side north of the point-bar sand.

Regionally, Lower Tuscaloosa reservoir parameters are on the order of 45-70% water saturation, 18-26% average porosity, 100 md average permeability, with gross pay of 25-70 ft (average net pay 23 ft), and 225 bbl/acre-ft recovery for oil and 650 Mcf/acre-ft recovery for gas.

Due to the presence of clays, potential pay zones may be overlooked when analyzing resistivity responses. Resistivities as low as 0.6 ohms are not uncommon with the sands still resulting in initial potentials of 400 b/d of oil and 2.5 MMcfd of gas with no water.

TUSCALOOSA RESULTS

From 1986-90, 10 new strat trap fields have been established.

Of the 122 exploratory wells drilled, the 10 field discoveries have resulted in an 8.2% wildcat success rate.

There were 34 development wells drilled for this period, and 25 were completed for a 75% success rate.

Finding costs for the Lower Tuscaloosa were calculated to be $9.12/bbl. This figure is comparable to the $6.85/bbl value that was previously calculated in the Culbertson and Miller article that determined costs for the period 1981-86.

Additional development drilling is continuing in a number of fields that should lower the finding costs even more. For example, Berwick field had two productive wells at the time calculations were made. To date there are seven productive wells, and the field should ultimately produce 4 million bbl.3 Taking into account the additional development of Berwick field, the finding cost is reduced to $6.21/bbl.

FRIO TREND DEVELOPMENT

The Frio gas began producing in Mississippi at White Castle field in 1969.

The first Frio oil production in the state occurred at Stamps field in Wilkinson County in 1982. It was not until 1988 that activity picked up when explorationists began to process Tuscaloosa oriented seismic data for shallow gas anomalies (bright spots).

Using this bright spot technique, eight Frio fields have been found during the past 3 years. The most significant Frio discovery is Independence field, which has 15 producing wells and eight dry holes.

There are five producing zones above 4,000 ft at Independence field, and production already exceeds 4 bcf of gas with no water to date.

FRIO RESULTS

Exploratory success rates are quite high (61%) in the Frio trend.

During the past 5 years 18 wildcat wells were drilled, and the result was that 11 field discoveries were made.

Of the 32 development wells drilled, 21 were completed for a 66% success rate. As mentioned above multiple pay zones, shallow depths, and high success rates are just a few of the attributes of this play.

Due to the newness of the Frio trend, it was decided that the best method to calculate finding costs was to assume that the average well will ultimately produce 500 MMcf to 1 bcf of gas. This range appears to be valid as suggested by companies active in the trend and cumulative production (Table 2).

Therefore, finding costs for the Frio were determined to be 40-81/Mcf.

CONCLUSION

For the past 10 years, the reserves found in the Lower Tuscaloosa of southwestern Mississippi have resulted in low finding costs.

With the proper application of exploration technologies, there is no reason to believe that the next 10 years won't be just as rewarding.

The Frio play in Mississippi should continue to expand due to the high success rates and shallow depths.

Although the play has been concentrated in the southwestern part of the state, the potential for shallow gas plays exists all the way to Dauphin Island, Ala.

REFERENCES

Culbertson, V., and Miller, D., What are we paying to find oil, gas in Mississippi, Alabama?, OGJ, May 7, 1990, p. 148.
Devery, D.M., The Lower Tuscaloosa of southern Mississippi, Mississippi Geology, Vol. 1, No. 2, 1980, p. 7.
Garrison, R.K., and Chancellor, R., Berwick field: The geologic half of the seismic stratigraphy story in the lower Tuscaloosa Mississippi, Gulf Coast Association of Geological Societies Transactions, Vol. 41, 1991, p. 299.
Mississippi State Oil & Gas Board, 1989, Mississippi Oil & Gas 1989 annual production report.