?It’s not unheard of these days for companies to tout $6-million wells that recover 250,000 barrels of oil. These are unconventional wells, of course, that bring the latest engineering advances to bear on recalcitrant rocks. They feature thousands of feet of laterals and numerous artificial stimulations.
Nonetheless, places still remain where simple vertical wells in conventional reservoirs can offer superior rates of return. The Central Kansas Uplift is such an area, and that’s where Denver-based Teton Energy Corp. has just completed a major expansion.


In April, the company acquired approximately 48,000 gross (31,500 net) acres of leases in a vintage producing area in central Kansas from privately held Shelby Resources LLC. The deal featured 12.9 billion cubic feet equivalent (Bcfe) of proved reserves, and another 16 Bcfe in probable, possible and potential resources.
“The acquisition nearly doubled our size and has diversified our portfolio, both geographically and in terms of our reserve mix,” says Karl Arleth, president and chief executive. The company’s production will jump from 4.3 million cubic feet equivalent per day at year-end 2007 to an expected average of 9.3 million a day for 2008.
The deal included an 8,700-acre block that contained 50 producing wells and 56 locations spread among various proved and probable categories. The company also acquired nearly 40,000 undeveloped acres. Teton has assumed operations, and Shelby participates with a 40% interest in the exploratory position. The two companies formed a 5,200-square-mile area of mutual interest, and continue to lease.


It’s a bit of a contrarian play, given the popularity of shale targets. Teton is prospecting mainly for Arbuckle, the workhorse of Kansas reservoirs. “The Arbuckle surface is eroded and karsted, and oil is produced from small structures within the top of the formation,” says Rich Bosher, vice president, business development.
Arbuckle bumps on the Central Kansas Uplift typically cover 40 to 50 acres in size and are developed on 10-acre spacing. A completed 3,300-foot Arbuckle test costs $300,000 and initial per-well production rates vary from 40 to 130 barrels per day. Estimated single-well recovery is 50,000 barrels of oil.
That means each feature can contain around 275,000 barrels of oil that can be fetched by investment of $1.5 million. “Economics are excellent,” he says. “At $40-per-barrel oil prices, rates of return are 20%. At current prices, these wells pay out in two to three months.”
Teton sees 3-D seismic as an essential tool. Seismic allows operators to image Arbuckle bumps and substantially reduces dry-hole risk, the historic bugaboo of the play. Indeed, 3-D is so effective that its use boosts exploration success rates on the Uplift to around 80%.
Currently, Teton has 52 square miles of 3-D data in hand, and plans to acquire additional seismic this year. “On the data we already have, we have 70 promising leads,” says Arleth. “That gives us at least two to three years of running room."


Additionally, the Arbuckle is a good candidate for recompletions, particularly with polymer squeeze jobs. “Until a few years ago, common practice was to drill just a couple of feet into the Arbuckle to avoid water,” says Bosher.
Work by the Kansas Geological Survey proved that the carbonate, which varies in thickness from 200 to 600 feet, actually carries oil throughout. Now companies drill and complete much deeper in the section and use squeeze jobs to isolate water-bearing intervals. Teton has 12 such jobs on its schedule this year, in addition to 29 new drills.
Further attractions abound. Most leases are fee, and landowners in the area generally welcome the industry. The shallow wells are unobtrusive, and oil and gas production shares a long and synergistic relationship with other economic activities in this slice of the heartland.
Commodity prices are based on Midcontinent markets, which are more favorable to producers than those in the Rockies. And, the state of Kansas encourages oil and gas investments.
“This type of play may not suit a very large company, but it’s perfect for Teton,” says Arleth.

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