Continued Evolution of Austin Chalk Production

Austin Chalk Oil and Gas Fields Map

Regional Production

The Austin Chalk has been producing oil and gas in Texas since at least the early 1920's and has cumulative production of 948 million barrels and 5.6 trillion cubic feet of natural gas through the end of 2016.  The largest Austin Chalk oil field is the Giddings Field, located in parts of 7 counties, with cumulative production of 526 million barrels of oil and 4.7 trillion cubic feet of gas.  The Austin Chalk directly overlies the prolific Eagle Ford Formation which is the primary source of most of the oil in the chalk.  Oil migrates into the chalk through microfractures and fills the fractures and the porous intervals. Until recently, operators targeted fractured zones within the chalk and ignored primary porosity due to the low permeability nature of the chalk.  That is changing as other operators identify and target porous intervals in the chalk with large, modern multi-stage fracs attaining spectacular results.

Austin Chalk Production History and Timeline

Austin Chalk Production Graph.jpg

The Austin Chalk has produced oil and gas since the 1950's from vertical wells.  Widespread use of fracture stimulation in vertical wells began in 1975 after the Middle East Oil Embargo.  Oil production increased over the next six years from 7,300 (BOPD) barrels perday to 147 (MBOPD) thousand barrels per day in 1981.  Gas production increased from 7 (MMCFPD) million cubic feet/day in 1974 to 475 (MMCFPD) million cubic feet per day in 1982.   The next shift in technology began in 1989 with the widespread use of horizontal drilling. Application of ths technology further boosted oil production from 50 MBOPD to new highs of 165 MBOPD and natural gas from 171 MMCFPD in 1989 to 1,390 MMCFPD in 1996. 

The combination of horizontal drilling with the innovation of multi-stage fracture stimulation in horizontal wells created the shale revolution.  This is the single largest innovation in the oil and gas industry in at least the last 50 years.  Application of this technology in the underlying Eagle Ford formation created production growth from essentially ZERO in 2008 to  1.7 MMBOPD in 2014 at it's peak.  The Austin Chalk however, has been largely ignored until 2015 when this combination technology started to be applied.  Finally in 2015, the Austin Chalk oil and gas production began to slowly increase after years of slow decline.  After seeing the results of previous technological innovations and associated production growth, one can only imagine how high production could go.  After all, the Austin Chalk is the direct recipient of the massive amounts of hydrocarbons generated in and expelled from the Eagle Ford Shale source rock. 

For more information go here...https://www.spe.org/en/jpt/jpt-article-detail/?art=2795

Austin Chalk Activity On the Rise

Austin Chalk Reservoir Volume Map (SOPHI-H) and Recent Drilling Activity

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Enervest , Blackbrush, Gulftex, Marathon, EOG and Murphy have been responsible for the development of the Austin Chalk in the Karnes Trough and Eastern Monocline areas.  This area had been drilled by other operators for years searching for Austin Chalk fractures and associated oil and gas production, but outside of Peach Creek and First Shot Fields results were disappointing.  Blackbrush Oil & Gas and Gulftex Energy were the first companies to target porous intervals in the Middle Chalk in northern Karnes County with initial potentials in excess of 2,000 BOPD.  Normally the Austin Chalk has very low porosity, but in this area the chalk has intervals where porosity exceeds 8%;  truly remarkable considering most of the chalk has porosity of 2%-3%.  EOG quickly followed Blackbrush and Gulftex, drilling their best well to date at the Kilimanjaro 101H well producing 675 MBO & 1.2 BCFG in just 9 months!  These results are very impressive, but when you look at the underlying Austin Chalk Reservoir Volume (Oil Saturation x Thickness x Porosity) Map these results should not be a surprise.  In the areas where the reservoir volume increase in northern Karnes County, the well results improve dramatically.    

There are other areas along trend that warrant further investigation, too.  Along the Cretaceous Shelf Margin in Fayette, Colorado, Washington and Austin Counties there is an unfractured area of very high reservoir volume, exceeding 15 sophi-h as compared to 5 to 8 sophi-h in northern Karnes.  The potential in this area is tremendous and operators are beginning to notice.  Older down dip Austin Chalk gas wells in the fractured trend have ultimate recoveries up to 38 BCF at flow rates of 30 MMCFPD to 84 MMCFPD!  These very high flow rates also indicate that the reservoir is extremely over-pressured.  Over-pressure is a game-changer in tight reservoirs, "Pressure is your friend" is a phrase often heard from geologists and engineers studying unconventional resources.  Further reasearch into shut-in casing and tubing pressures indicate this is absolutley the case, with bottom hole pressures exceeding 10,000 psi.  Lets take a closer look.

 Austin Chalk SoPhiH Map (porostiy x thickness x hydrocarbon saturation)  with estimated bottom hole pressure contours (black lines)

Austin Chalk SoPhiH Map (porostiy x thickness x hydrocarbon saturation)  with estimated bottom hole pressure contours (black lines)

Operators Zoom in on the deeper Giddings Field Area

Austin Chalk Resevoir Volume Map with Estimated Bottom Hole Pressure Contours

Zooming into the Austin Chalk Reservoir Volume Map with added BHP contours we see that the operator activity around the thick porous area is increasing.  Wells that have been permitted since January 2016 are shown on the map.  Also, notice the massive production from gas wells located east of the core that were drilled during the 2nd technology wave of horizontal drilling.  These were drilled by various operators but are now owned by Enervest who has consolidated a large portion of Giddings Field.  Enervest is the 500 pound gorilla in the Giddings area having consolidated several large positions since 2007.  They have permitted four wells on the flank of the core since 2016 but have not commenced drilling.  They have most likely been busy with their latest shiny new toy.  Last year they purchased chalk interests in Karnes County from Gulftex, Blackbrush and Alta Mesa for $1.3 billion.  See story here:  http://www.bizjournals.com/houston/news/2016/05/17/houston-company-scoops-up-eagle-ford-assets-for-1.html 

 We can identify the operators and see where they are interested.  EOG has quietly permitted a test in northeastern Colorado County very near the core of the highest reservoir volume.  Often when significant operators such as EOG do not want to be identified, they will permit and drill wells incognito.  In this case EOG is operating under the name of Pallas Energy at the 1 Tonkawa Unit location.  Rumor has it Pallas/EOG, have been actively leasing in the Fayette, Colorado, Washington and Austin County areas flank to the highest reservoir volume.  Industry eyes will watch for the results of this well, which are sure to be subdued to reduce competition.

Geo-Southern has also been very active in this area in the last year leasing and drilling wells while being very quiet about their results.  They have accumulated a large acreage position in excess of 100,000 acres.  The first well Geo-Southern drilled in the area was the 1-Fowler well which tested at rates up to 14 MMCFPD with 150+ BOPD.  This well was the first in the Giddings area to have a large modern frac and the results are strong.  Since the Fowler well completion, they are drilling and testing in the Fayette County area where there have been no results released, but the sheer volume of permits filed in rapid succession lead one to believe they are happy with their results.  And yet they are still on the edge of the thick porous core.

According to landowners in the Giddings area, leasing activity has been brisk and acreage prices are being pushed higher.  Karnes County acreage soared to $100,000/acre in the core area acquired by Enervest in 2016 .  Is this an indication of where Giddings area acquisition prices could go??  Blackbrush Oil & Gas is also rumored to be leasing in the deeper Giddings area.  Blackbrush's entry is no surprise given their in-depth knowledge and drilling success in the chalk.

Finally...

An old oilfield adage simply states "big fields get bigger."  Giddings is the largest field in the Austin Chalk trend and the potential remains high for draining new reserves from improved drilling and completion techniques in this old giant.  This has already occurred twice previously as each successive wave of innovation boosted production to new heights.  Look for increased drilling activity in the area as new entrants finalize their lease positions, prepare to drill new development wells and deploy the latest completion techniques.  This technology is transformational and makes oil and gas reserves accessible that were not previously recoverable.  Production should be on the rise and make new highs in the very near future.

"Make Austin Chalk Great Again!"

"Drill Baby Drill!"