Viability Of Brown Dense Oil Field a Mystery

by Luke Jones  on Monday, Jun. 4, 2012 12:00 am  

(Note: A correction has been made to this story. See end of story for more.)

In the wake of the natural gas boom in north-central Arkansas, residents near the Louisiana border are hoping for a similar bonanza in the oil-rich area known as the lower Brown Dense formation.

So far, however, it's simply not clear whether there's enough oil trapped in the carbonate mudstone to be worth the millions of dollars it costs to sink each well.

Southwestern Energy Co. of Houston went on a leasing spree in the Brown Dense a couple years ago, spending some $195 million to lease mineral rights on 520,000 acres across the formation. It's completed one test well so far and has a permit for a second.

Cabot Oil & Gas Corp. of Houston holds 13,600 acres in the play. It has reported some results from its test well, but the drilling is not yet completed. Weiser-Brown Operating Co. of Magnolia also has a well.

Each well drilled deep into the formation costs between $3 million and $5 million, according to Ed Ratchford, senior petroleum geologist at the Arkansas Geological Survey.

"By the numbers I had heard, Southwestern needs 400 barrels a day to make [its well] feasible," said Columbia County Judge Larry Atkinson.

Southwestern reported in February that its first well had a peak production rate of 103 barrels over a 24-hour period. In April, Cabot reported peak production of 206 barrels per day from its initial well.

(Click here for a sidebar on barrels and other industry terminology.)

"It's hard to tell on the standpoint of what a good well would be in the Brown Dense," said Larry Bengal, director of the Arkansas Oil & Gas Commission. "Even though a well may produce several hundred barrels of oil per day, if the drilling and production costs exceed the viable returns on investment, that wouldn't be considered an economically viable well. All those are unknown at this point in time."

"There is a period of time where they can examine, research, tweak and refine the whole completion process of the well before they put it online and it starts to produce," Ratchford said. "That's where we're at right now."

Bengal said companies would now be experimenting with different completion techniques and deciding on the optimum drilling completion cost.



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