Mitchell hikes Barnett shale reserves, Fort Worth basin output in N. Texas

Sept. 27, 1999
Mitchell Energy & Development Corp., The Woodlands, Tex., is quickening recompletion and drilling programs aimed at gas in low permeability Mississippian Barnett shale in the Fort Worth basin in North Texas.

Mitchell Energy & Development Corp., The Woodlands, Tex., is quickening recompletion and drilling programs aimed at gas in low permeability Mississippian Barnett shale in the Fort Worth basin in North Texas.

Mitchell has booked an additional 213 bcf of gas reserves in the Barnett, an increase of 25% over total company proved gas reserves as of Jan. 31, 1999. It said stepped-up drilling and recompletion work could double or triple current net gas production of 74 MMcfd from the Barnett shale during the next 4-5 years.

Cost improvements in fracturing the wells and expansion of the play outside Mitchell's traditional core producing area contributed to the increase in reserves.

The company operates almost all of the basin's wells that produce from Barnett shale. Mitchell has 428 Barnett wells producing, has identified 750 proved undeveloped and probable locations in the Barnett, and says another 1,000 locations could be economic on currently leased acreage, said George P. Mitchell, chairman and chief executive officer. The 750 locations are more than double the number the company saw in those categories just 8 months ago and are economic even at the lower gas price levels of early 1999.

The company plans to hike Barnett shale drilling to 100-130 wells/year the next 4-5 years, compared with 56 in fiscal 1999 ended last Jan. 31.

"This not only will boost our gas production, but will provide a stable source of reserve replacement over the next 4-5 years," Mitchell said.

The company has more than 100,000 acres in the Barnett, most of it held by production.

Fracturing economies

Driving the increase in development activity is application of lower-cost "light sand" fracture stimulation technology.

Having drilled so many Barnett shale wells, Mitchell has cut overall completed-well costs markedly the past several years. Now it drills a typical well to 6,500-7,500 ft in 7-10 days for a completed cost of about $550,000.

However, the frac job remained the single largest cost element.

Mitchell used to use 1-1.5 million lb of sand in a conventional treatment. Conveying that volume required large volumes of expensive gelled fluids.

Because of the low price environment that existed in 1998, it sought out a less costly alternative. This led Mitchell to try the "light sand" fracs that other companies pioneered in East Texas.

During the past year, Mitchell found it could get the same or even better results using about 10% of the former sand volumes and conveying that with inexpensive slickened water that reduces friction.

The "light sand" frac resulted in a savings of about $140,000/well in sand, chemicals, and gel, said John Hibbeler, senior vice-president of exploration. This translated to a reduction in unit development costs to 47¢/Mcf from 64¢. Estimated ultimate recoveries are running at a gross 1-1.25 bcf/well.

Geologic, areal expansions

The play is spreading from formerly the thicker Lower Barnett shale into the thinner Upper Barnett shale, and it is also spreading south and east from Mitchell's core area, said Dan Steward, vice-president of Midcontinent exploration.

Mitchell has not exploited the Upper Barnett until recent months, mainly because conventional frac stimulations were not economic. Upper Barnett is 100-150 ft thick vs. 300-350 ft for Lower Barnett.

Since both zones are amenable to the "light sand" fracs, about 40 wells are producing from Upper Barnett now. The ability to recover gas economically from Upper Barnett increases estimated reserves per well in Mitchell's core area by 250 MMcf, or 25%.

More importantly, Mitchell said, adding the Upper Barnett converted marginally economic undrilled locations to the south and east of the core area into very attractive opportunities (see map, OGJ, May 25, 1998, p. 67). The core area, centered on Newark East field, covers portions of southeastern Wise County and southwestern Denton County.

The company signed up two more rigs to drill a 25-well program in the expansion area during second half 1999. So far only 40 wells have been drilled there. The expansion area extends southward into northwestern Tarrant County.

Mitchell also started a program to recomplete 262 core area wells in Upper Barnett. It will commingle gas from the two zones.

About 122 bcf of the 213 bcf of newly booked reserves is attributable to 150 proved undeveloped locations added in the expansion area. The rest is associated with Upper Barnett reserves added to producing wells and previously booked undeveloped locations in the core area.

The areal expansions of the play will involve close cooperation with real estate developers on the northwestern side of Fort Worth.

Another possible future activity is re-fracturing the existing Lower Barnett wells using "light sand" technology. A pilot program of 6-10 wells has begun to evaluate the economic feasibility of this. Early results are encouraging and could ultimately lead to the refracturing of essentially all of the existing Barnett wells.