North America has been the beneficiary of an enormous revolution in the oil and gas industry—unconventionals. Some of the more established plays have practically become household names—the Bakken, the Eagle Ford, the Marcellus. And as these plays mature, there aren’t a lot of contenders, at least in the U.S., to take their place.

John Dunn, Lower 48 manager for Wood Mackenzie, recently told a group of reporters that of the new plays that are being examined, “we don’t have a play that’s as exciting as the Eagle Ford or the Bakken.”

Still, there are some interesting stories unfolding not only in shale but in other unconventional reservoirs as well. And there are hopeful players who are poised to be early movers in these plays.

TMS

Not to be confused with “TMI” (too much information), “TMS” stands for the Tuscaloosa Marine Shale, and the information about this play is very encouraging indeed. Players such as Goodrich Petroleum, Comstock Resources, Sanchez Energy, Encana and Halcon Resources are quite bullish on the region.

According to information on Goodrich’s website, the play covers about 2.5 million acres in eastern Louisiana and southwestern Mississippi. A number of vintage wells dating back to 1962 have helped define oil saturation and rock quality. Wells produce high-quality crude and high-Btu gas.

In a slide comparing cumulative TMS production to a Bakken and Eagle Ford base case, Goodrich and Encana both have wells with better cumulative production than these more established plays, with Goodrich’s Crosby 12H-1 cumulatively producing 180,000 boe by its 15th month of production.

Halcon recently announced the results of its first well in Wilkinson County, Miss., which achieved a 24-hour IP rate of 1,208 bbl/d of oil and 31 Mcm/d (1.1 MMcf/d) of 1,551-Btu gas on a 19/64-in. choke. Based on gas composition analysis and assuming full ethane recovery, the company estimates that the well will produce an additional 212 bbl of NGL per day for a total 24-hour average IP rate of 1,548 boe/d.

Floyd Wilson, chairman and CEO of Halcon, was at Petrohawk when that company discovered the Eagle Ford Shale in South Texas. Later, at Halcon, Wilson and his colleagues pushed the Eagle Ford east into Brazos and Burleson counties and named the discovery “El Halcon.” The play is mostly oil, and Wilson said the geology basically extends from the Mexican border all the way to Florida.

“It’s the same age rock; in fact, we would say it’s the Eagle Ford,” Wilson said. “But it’s become convention to call it the TMS.”

While Wilson balks at being credited with any kind of TMS discovery, “We have jumped in with both feet,” he said. In 2013 Halcon built its acreage position to more than 300,000 acres. It already has announced its first well results, is completing its second well and is spudding its third.

The older well data are helpful, he said. “We did a huge amount of research. We probably had 20 people working on it for more than a year before we started drilling.
“And we’re really excited about it. It may not be the last, but it’s going to be one of the last really large-scale oil shale plays in the U.S. in my opinion.”

A large areal extent helps. Wilson said the fairway is 161 km to 240 km (100 miles to 150 miles) east to west and 48 km to 77 km (30 miles to 40 miles) north to south. “It has room for thousands and thousands of wells.”

Cleveland Sandstone

The Anadarko Basin has been home to oil and gas activity for decades, and most recently operators have been chasing the Woodford Shale and the new South Central Oklahoma Oil Province play. To the west of these new plays, the historically productive Cleveland formation has been seeing increased attention as well.

While not a shale by geologic standards, the Cleveland formation is characterized by a tight, shaly sand with low permeability that lends itself to enhanced drilling and completion technologies. According to Jonny Jones, founder and CEO of Jones Energy, the formation is very similar to other Pennsylvanian reservoirs in the midcontinent, with porosities ranging from 8% to 10% and permeabilities ranging from the nanodarcy scale up to microdarcies. There is very little natural fracturing.

Jones Energy and its predecessor, Jones Energy Holdings LLC, have been active in the Anadarko Basin since the late 1980s. The Cleveland was not the original target, Jones said, but it started to look promising around 2004 due to the success other operators were having. Jones Energy drilled two wells in 2004 and ramped up rapidly to drilling 45 in 2008. After prices began to recover in late 2009, the company resumed drilling in 2010 and averaged roughly 30 wells per year through the end of 2012. That figure rose to 70 wells in 2013, and Jones is budgeting for more than 100 wells to be drilled in 2014 in the Cleveland alone.

“The appeal of the Cleveland formation stems from the overall industry shift to horizontal drilling,” he said. “The Cleveland was always a potential target in a vertical well case, but the real value proposition became apparent once early movers in the play started to see positive returns from drilling horizontally.”

Jones Energy currently has drilled about 350 horizontal wells in the play, he added. “Our continued reapplication of lessons learned within this play has allowed us to become the low-cost leader,” he said.

Jones Energy has eight rigs running in the Anadarko Basin—seven in the Cleveland and one drilling Tonkawa wells. Jones said there are currently no plans to increase the rig count, but the company might increase capex to accommodate an enhanced completion technique. A recent frack trial involved 20 wells and used a cased-hole completion with 20 three-cluster frack stages per well. Proppant and water rates were increased. While full results of the test have not been released,18 of the 20 wells are performing at or above Jones’ historical Cleveland horizontal type curve.

So what makes this play a keeper for Jones Energy? “The Cleveland play covers more than 2 million acres, making the size of the prize significant, with thousands of wells remaining to be drilled,” Jones said. “This play will continue to be a paramount asset for us … [because] we know how to make money in the Cleveland.”

Frontier Formation

Located in the east Powder River Basin at depths of more than 2,590 m (8,500 ft), the Frontier Formation is comprised of the Belle Fourche member, the Emigrant Gap member and the Wall Creek Sandstone member. Each member has its own lithology characteristics. The formation is part of the larger Mowry Composite Total Petroleum System.

The play is so new that several operators declined to comment until they obtained more information. “The majority of operators are still in the appraisal mode of development, even after five years of drilling in some cases,” said Ryan Duman at Wood Mackenzie’s Lower 48 Upstream Team. “The transition to full-scale development has been slow, but operators have recently allocated greater capital and rigs to the play, indicating improved optimism.”

Duman added that positive traits include the presence of multiple stacked productive formations, oil-rich production and growing rail takeaway capacity. Negative traits include variable well costs, geologic heterogeneity across the basin and permitting delays.

“Watch for drilling to home in on particular zones, and also watch for portfolio high-grading by smaller players with Powder River deep-sand asset packages coming to market,” he said.

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