SPE 18927 - Hardeman Basin

SPE 18927 Success Rates and Reserves in the Hardeman Basin of Texas

This paper was selected for presentation by an SPE Program Committee following review of information contained in an abstract submitted by the author. Contents as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author. The material as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial committees of the Society of Petroleum Engineers. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Write Publications Manager, SPE, P.O. Box 833836, Richardson, Texas 75083-3836.

ABSTRACT

North Texas' Hardeman Basin contains a number of prolific Mississippian carbonate oil fields discovered mainly in the last ten years. A statistical study of reserves and success rates has been made of nearly all the wells drilled in Hardeman County, including the shallower formations. The study shows the primary Mississippian objectives have a current success rate of 18% and will average 169,500 bbl (26,948 m3) per well,- uneconomic at present oil prices and costs.

INTRODUCTION

The Hardeman/Hollis Basin covers portions of eight counties in Oklahoma and Texas, but the production is overwhelmingly dominated by Hardeman County, Texas. For this reason, and because other parts of the basin are sparsely drilled, the study of reserves and success rates was limited to Hardeman County where sufficient statistical data were available.

The success rate study involved nearly 1,000 wells drilled from 1947 through December, 1987. Reserves were evaluated for 443 completions on 373 leases in the county using data through August, 1988; nearly all the wells that have produced although a few wells were not evaluated because either insufficient production history was available or their completion status was unclear.

Recompletions in shallower zones presented a minor problem in assembling the statistical data since information regarding these is often unreported in the commercial information services or incomplete. Adjustments were made where it was clear a successful recompletion in a different formation took place.

Associated gas production is relatively insignificant in the county, and is often vented where the cost to equip and lay gathering lines cannot be justified. Notable exceptions include the Kyle, Reprieve, Thrash and a few other fields located mostly in the county's northeastern corner. Oil ultimate recovery figures were not adjusted to a barrels of oil equivalent because produced gas contributes in only a minor way to most wells' economic value.

BACKGROUND AND HISTORY

Hardeman County lies in the center of the Hardeman Basin which covers portions of five Texas and three Oklahoma counties. Some geologists refer to the northern part as the "Hollis Basin", and there continues to be some dispute over separation of two. This basin appears to be an embayment of the larger Palo Duro basin to the West although questions regarding character and development differences also persist among geologists studying the area.

Although the basin's rock volume is dominated by Pennsylvanian and Permian shales and sandstone, the basin's hydrocarbon production is mainly oil from the lower Mississippian carbonates. Production also occurs from Pennsylvanian Strawn sands, Canyon Lime, Palo Pinto limestone, a series of lenticular conglomerates, and the Ordovician Ellenburger dolomite.

Drilling began in Hardeman County in 1939 with the earliest production coming in 1950, but the basin did not attract much interest until the 1959 Conley Field discovery by Shell Oil. As Figure 2 shows, the next eight to ten years were a period of high activity as the discovery was developed and other operators were attracted by the success at Conley. Significant among the other drilling was the 1965 discovery of the multi-pay Thrash field in the northeast corner of the county. Despite the substantial size of these fields, depressed oil prices (+/-$3/bbl) and the general lack of success that followed, led to declining interest in the area. No wells were reported in 1971 and only minor activity in the following five years. Rising prices in the mid-1970's and improvements in seismic processing brought the basin back to life and led to a number of Mississippian discoveries beginning with the prolific but short lived C.J. Gilliam No. (Enserch Exploration) in late 1975, classified in the Red River Field.

Drilling since the Red River Field discovery has generally mirrored the rise and fall in oil prices, from a peak 154 attempts in 1984 to 64 in 1987. Projected activity for 1988 is expected to be at the same or lower level. As Figure 3 illustrates, the overall success rates for all formations rose sharply with the discovery of Conley Field, then fell rapidly followed by a decline in the number of wells drilled. Since the Red River Field discovery in 1975 overall success has remained fairly constant at about 32% when all formations are considered. Success, as used in this paper, is defined as a completed producing well filed with state regulatory agencies.

PRESENT

There are have been 136 field discoveries in Hardeman County, 81 producing from Mississippian or Ellenburger carbonates, 31 Pennsylvanian age conglomerates, and the remainder producing from Strawn series sands (11), Canyon lime (1), and Palo Pinto limestone (12). Since the Mississippian dominates the county's production and reserves, much of this study focused on these reservoirs, although statistics have been developed for the conglomerates, Palo Pinto, and to a lesser extent, the Strawn sands. The shallower formations, particularly the Pennsylvanian age conglomerates, have occasionally been secondary objectives zones in the event the Mississippian was not productive, although a recent trend in drilling for the Palo Pinto as primary objective has developed with apparently good results.

Major company activity in the basin largely ended in the years following the Conley discovery, and although there have been sporadic entries in the region by other major oil companies the basin remains a small-to-medium independent's play. With a few exceptions, the smallest operators have been significantly less successful, most likely due to the complexity of the seismic processing and interpretation needed to develop the Mississippian prospects.

SHALLOW ZONES

The shallow objectives in the Hardeman basin include the Canyon and Palo Pinto limestones, Canyon sands, and Strawn sands, all of middle and upper Pennsylvanian age and generally in the 4,000-6,000 ft (1,312-1,968m) depth range. Production from the "Canyon Reef" is limited to one field, Herg, discovered in 1980 and located on the far western edge of Hardeman County. With a few exceptions, the other fields produce either from isolated and limited extent sands, or from shallower formations in the larger structures, notably the Conley and Thrash fields. Other than these two multi-pay fields, it is rare for shallower formations to produce within the smaller Mississippian features.

Because data on these shallower formations is limited and as their contribution to the basin's production is relatively minor, the statistical studies were grouped into one classification. Reserves from 91 wells in 21 fields were evaluated, mostly using rate-time curves, which appear to be a reliable method in these mostly depletion-type reservoirs. Cumulative production, through August, 1988, from this group averages 55,765 bbl (8,866 m3) per well with minor amounts of gas. Ultimate oil recovery is estimated to be 74,324 bbl per well.

Figure 4 shows the frequency distribution of ultimate oil recovery for the shallow zones. The high ultimate recovery wells include Palo Pinto Lime completions in Thrash and Quanah fields, one Swastika sand completion and one Palo Pinto sand completion. Twenty-two percent of the shallow wells will make less than 10,000 bbl (1,590 m3 ) and over half will recover less than 35,000 bbl (5,565 m3).

A study was also made of the success rate for wells encountering these shallow formations, essentially all 984 wells reviewed in the study. Of the wells which drilled through this section, only 1.4% were successfully completed (not necessarily economic) in one of the shallow zones other the Palo Pinto Lime. Success in the Palo Pinto has been somewhat better at 5.3%, but recent efforts with this formation as the primary objective have increased, and success rates have risen substantially. No comprehensive attempt was made to consider potential recompletions in wells presently producing from deeper formations but these are not believed to be significant in view of those logs which were reviewed in detail.

CONGLOMERATES

Scattered through about 1,000 ft (328 m) of Pennsylvanian section are a series of lenticular Atoka conglomerates, sometimes called granite washes, which produce erratically throughout Hardeman County. They have only rarely been primary drilling objectives and are for the most part secondary zones for non-productive or abandoned Mississippian wells.

Deposition of these non-marine conglomerates is attributed either to the erosion of uplifted areas north and south of the present basin, or to detritus from localized faulting. They range from a few feet in thickness to 25 ft (8.2 m), with crossplotted porosities of 8% - 20%. Most of the productive conglomerates occur at depths from 6,700 to 7,300 ft (2,198-2,395 m) and have greater than 14% crossplotted porosity. It is rare for any to produce at less than 12% porosity. Permeability information is generally not available, but typical producers are estimated at 2-3 md. Formation water resistivity averages .025 at formation temperature of 170 F (77 C), with typical chlorides of 95,000 ppm although one well recovered 120,000 ppm Cl- from a conglomerate at 7,200 ft (2,362 m) - more in line with Mississippian water and possibly a result of a cement channel.

Water saturation calculations are often unsatisfactory in the conglomerates, likely due to the effect of certain conductive minerals in the rocks. Several initial water free completions have formations resistivities as low as 2.5 ohmmeters, and a calculated water saturation greater than 65%.

Oil gravity averages 43.8 API, ranging from 41 to 52. The reservoirs tend to be underpressured with initial bottomhole stabilized pressure of 3,000 psig (20,684 kPa), and appear to be consistently depletion-type. Often the wells flow on completion, but require artificial lift within a few months. The production is characterized by rapid declines (40% plus) with some hyperbolic tendency after a few years, flattening to 20-25% decline.

Through August, 1988 the 73 producing conglomerate wells studied have an average cumulative of 16,919 bbl (2,690 m3 ) and are projected to produce an average gross ultimate of 20,394 bbl (3,242 m3). Figure 5 summarizes the frequency distribution of ultimate reserves for the conglomerates.

Of the 905 wells in the success rate study which drilled through this section, successful conglomerate completions were made in 7.2%. It is believed that recompletion of present Mississippian wells will have only minor effects on this success percent. It should be noted, though, that only rarely have the conglomerates been the primary objective of a well and exploration efforts have not focused on this formation.

In summary, a well drilling the conglomerate or Mississippian section will have a 7.2% success rate in the conglomerates and will find an average reserve of 20,400 bbl (3,243 m3). Nearly 40% of the successful wells will recover less than 5,000 bbl (795 m3).

MISSISSIPPIAN / ELLENBURGER

Distinguishing between the Mississippian and Ellenburger carbonates is difficult with electric logs and tentative with drill cuttings. Since the producing characteristics are similar, this study combines the two zones for statistical purposes.

Most of the Mississippian fields in the county produce from the Chappel member of the Osage series. It is a fractured, often vugular carbonate and dolomitic in the best fields. Gamma ray logs frequently show high radioactivity in porous sections which range up to 30% porosity. Cores have shown vugs as large as 1 x 4 inches (2.5 x 10 cm), often lined with calcite crystals. Permeability is very high, sometimes immeasurable due to the heavy fracturing and voids but buildup tests on some of the better reservoirs show permeability in the 6 md range. Probably more than 50% of the fields have strong bottom water drives but there are also some depletion-type reservoirs and partial water drives, Most of the reservoirs are undersaturated with gas oil ratios ranging from 100-12,000 scf/bbl (18-2,161 m3/m3 ) but averaging 1,500 scf/bbl (270 m3/m3) on the wells with reliable gas production information. Gas is vented in many of the fields.

Earlier completions were conventional perforated casing type but Primary cement job problems coupled with later channeling and early water breakthrough has led many operators to drill just a few feet into the top of the porosity, set casing and complete open hole. This approach appears to help but it may bypass deeper oil, limits what can be done if water coning does develop, and certainly makes determination of reservoir size difficult or impossible.

The oil gravity averages 44.3 API with a 37 to 54 range. A few crudes have properties resembling volatile oil. Saltwater chlorides are in the 130,000 ppm Cl- range with bottomhole temperatures of about 190 F (88 C). The original bottomhole pressure in most Mississippian wells is +/- 4000 psig (27,579 kPa).

About two thirds of the fields are on statewide 40 acre density (16 ha). Most of the others have 80 acre (32 ha) field rules but are really developed on 40 acre density. Spacing is usually 467/1200 ft (142/365 m) with variation to wider spacing in some fields.

Per well cumulative oil production averages 77,098 bbl (12,258 m3) through August, 1988 for the 282 Mississippian/Ellenburger wells studied. Gross ultimate recovery projections were made on these 282 completions, resulting in an average of 161,735 bbl (25,714 m3) for both formations and 169,517 bbl (26,951 m3) for the Mississippian wells alone. The reserves were determined using rate/time curves for nearly 90% of the wells.

Many of the better wells, however, show no decline because of the highly effective water drive. In these cases, reserves were determined using either volumetrics where sufficient information was available, or by applying a flat rate for +/- 4 additional years then declining at rates comparable to analogous fields. This approach introduces possible error into the study, but experience in the county has shown cases where wells water out much earlier than expected, along with cases where production is sustained for very long periods. Because of the low number of wells estimated this way, and the probability of errors on both sides, it is believed the statistics presented are reasonable and reliable. Refer to Figure 6 for the frequency distribution of ultimate recovery.

The success rate study reviewed some 861 wells which penetrated the Mississippian section and of these 23% were successfully completed in this zone. Figure 7 shows the trend of this success rate over time. The recent ten years show a erosion in success rate, most likely due to a decline in prospect quality and reduction in the resource base as discoveries are made.

Figure 8 was developed to show any change in per well reserves versus completion date. The data is erratic and largely inconclusive, but there may be a recent trend of declining reserve size developing in the last five or six years.

Summarizing, a Mississippian drilling program should have a current success rate of about 18%, and will recover an average 169,500 bbl (26,948 m3) per well. Almost 48% of the Mississippian wells studied will recover less than 50,000 bbl (7,949 m3).

MISSISSIPPIAN DRILLING ECONOMICS

Since the Mississippian carbonates are the primary objective in the county, a further study was made of the economics of drilling these wells under various oil prices. The economic study was based on a completed cost of $340,000, an $850/month operating cost, 18% chance of success, a GOR of 1,500 scf/bbl (270 m3/m3) , and 169,500 bbl (26,948 m3) Of reserves. Prices and costs were held constant. Figure 9 shows the ratio of income to investment versus oil price for discounted (10%) and undiscounted cash flow.

CONCLUSIONS

Under present oil prices drilling in Hardeman County is not economically feasible for a large Mississippian drilling program. Individual prospects may certainly be profitable but historical performance shows that a sustained effort will only return 1.5 on the investment at $15/bbl oil prices and would require a price in the $21/bbl range to return 2:1 (undiscounted) on drilling cost. Palo Pinto wells are experiencing increased success and are probably economic at current prices. Although average recovery from the conglomerate wells has been poor, this formation has usually been evaluated in association with Mississippian tests and could provide better results if exploration efforts are directed toward it as a primary target.

REFERENCES

1. Petroleum Frontiers, Winter 1984, Vol. 1, No. 2;

"Hardeman Basin, Small, Oil Rich Graben in North Texas."

2. Howland, Allen: "Hardeman Exploration focuses on Oil,"

Drill Bit, April 1985, pg 16.

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