Oklahoma, the sixth largest oil-producing state and home of the Cana Woodford – the deepest active shale play in the US, according to Devon Energy Corp. – is experiencing an uptick in hydrocarbon production amid the shale gas bonanza. Independents like Oklahoma City-based Devon have gradually streamlined operations (the company announced plans to shed all its international and Gulf of Mexico assets in 2010) to focus on near-term, lower-risk unconventional assets onshore.

In Devon’s case, the company is building up its drilling inventory in the Woodford shale play, focusing on the liquids-rich window where the company has been credited with having discovered “a world-class resource” after drilling its first Cana well in 2007.

Part of the greater Late Devonian/Early Mississippian-age Woodford formation in the Oklahoma Anadarko basin, the Cana play is an overpressured reservoir that grades from dry gas to wet gas to oil. The rich gas shale ranges from 31 m to 91 m (100 ft to 300 ft) thick, with a vertical depth in wet areas from 3,048 m to 4,267 m (10,000 ft to more than 14,000 ft). It comprises a 2,590 sq-km (1,000 sq-mile) area covering Blaine, Caddo, Canadian, and Grady counties, roughly 80 km (50 miles) west of Oklahoma City and also extends into the West Texas Permian basin.

Brian Cardott, organic petrologist with the Oklahoma Geological Survey, distinguishes the Anadarko Wood-ford as one of four distinct hydrocarbon plays in Oklahoma, in this case condensate, with a thermal maturity of 1.1 to 1.5% Ro (vitrinite reflectance). As of December 2010, total vertical depths of 87 Woodford shale wells in the Cana play range from 3,380 m (11,075 ft) to more than 4,200 m (14,000 ft), according to an AAPG article by Cardott. Eighty-six of these were drilled horizontally with lateral lengths ranging from 680 m to 1,990 m (2,230 ft to 6,536 ft) and initial potential oil and gas rates ranging from 2 to 310 b/d and 668 to 8,367 Mcf/d, respectively. Oil and condensate gravities range from 45° to 65°API.

While the greater Woodford arguably has less resource potential than other prolific US shale gas reservoirs, the play’s economics, particularly in the Anadarko basin, remain solid enough to convince operators like Devon to strategically reposition and divert more capital toward exploiting its unconventional potential.

Devon’s 12 Tcfe discovery

According to Kris Goforth, Devon vice president, Anadarko Basin, the Cana play idea was generated in 2005. At that time, the company had 25,000 legacy acres in the Anadarko Woodford. Driven by success in the North Texas Barnett shale, Devon began leasing additional acreage, and by the time the first horizontal wells were drilled to test the play, the company had amassed an aggregate 64,000 acres.

In August 2007, Devon spudded the first Cana shale well in Canadian County.

Now Devon has 243,000 acres and 320 producing wells, both operated and nonoperated. And its Cana position is estimated to contain nearly 12 Tcfe in total resource (nearly 2 Bbbl of oil), with more than 81% of the company’s acreage rich in liquids. A large majority of this acreage, Goforth said, will be held by production by year-end 2011.

“To put it in perspective, five years ago Cana was an idea, four years ago zero wells were drilled, three years ago two wells had been drilled – both with technical challenges – and two years ago Devon had six rigs running,” she said. Entering 2011, Devon had 23 operated rigs running in the Cana Woodford, which was reduced to 17 at press time.

As its current strategy, the company continues to delineate and derisk its lease position, high-grading development in areas showing the most liquids potential.

Results in the exceptionally deep shale, which was uneconomic less than five years ago, have been impressive. For 2Q 2011, Devon reported record net production of 189 MMcfe/d in the Cana (including 9,000 b/d of liquids), representing a 17% increase over 1Q 2011. “We expect that figure to reach 275 MMcfe/d by yearend,” Goforth said.

The resource is substantial, she added, and offers repeatable drilling success with an inventory of more than 5,400 drilling locations.

Goforth credits increased production to technological improvements in E&P. “Devon has leveraged its success from technologies learned operating in earlier and shallower shale plays, such as drilling rig and bit technology, fracture stimulation, the use of 3-D seismic, well-flow techniques, pad drilling development, and cross-unit laterals,” she said. “We extended these practices into the Cana area, both refining and revising techniques for its unique challenges.”

Long laterals and multiple-fracture, higher-pressure stimulations are two applications that have continued to shape Cana shale development, and efficiency gains such as reduced stimulation days and improved average drilling feet per day are helping Devon set company records. The operator recently drilled its longest Cana well to date to 6,410 m (21,010 ft) total vertical and horizontal depth.

Ultimately, what Devon has jumpstarted in the Oklahoma Woodford shale has provided an abundance of good opportunities, according to Goforth, and the Cana play competes well with other unconventional assets in the company’s portfolio. A well drilled in the liquids-rich area of the play, for example, will generate a finding and development cost of US $6/Boe to $8/Boe and an after-tax rate of return of more than 30% based on a Henry Hub gas price of $3.50/MMBtu, she said.

“Unconventional onshore plays like the Woodford provide investment flexibility and less political risk,” Goforth said. During lean times, she explained, investment can be scaled back.

It is also a source of pride for the Cana’s leading producer. “Devon has discovered a world-class resource of 12 Tcfe more or less in our back yard,” she said.

Devon recently drilled its longest Cana well to date to 6,410 m (21,010 ft) total vertical and horizontal depth.

Oklahoma is OK

In late 2010, Devon completed a plant capable of processing 200 MMcf/d of gas to handle high liquids content generated by the Anadarko Woodford. The plant’s capacity can be tripled through future expansion as production grows, and Devon already has announced plans to add 150 MMcf/d of processing capacity for $125 million to meet the Cana’s high production growth rate. The expanded Woodford plant also will be able to process 27,000 b/d of liquids by 4Q 2012.

Although it has less resource potential, the Woodford could peak in the next decade at approximately 1.1 Bcf/d, according to an unconventional resources report published by Hart Energy Research in January 2011.

Meanwhile, wet gas areas like the Cana shale will continue to drive new exploration and revenue growth in Oklahoma, unlocking a wealth of domestic resources used for clean-burning fuel.

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