Last year, the Lower Cretaceous James Lime play on the Sabine Uplift was sizzling. Such well-known companies as Marathon Oil, El Paso Production , Belco Oil & Gas , Tom Brown , Pogo Producing and Samson Lone Star were competing hard for leases and prospects. Smaller firms- Winn Exploration Co. , Par Minerals Corp., Dual Production Partners, Mass Energy Inc. and Pedeco Inc.-had established their own beachheads as well. The huge play-which sweeps from Angelina through portions of Nacogdoches, San Augustine, Sabine and Shelby counties, Texas, into Louisiana's De Soto and Sabine parishes-promised to be the next reincarnation of the Austin Chalk. This year, the hype has somewhat abated. Picks have been bent, and lessons learned. Operators are now retrenching and figuring out just what makes the James Lime work. Several aspects of the James Lime contributed to its initial cachet. The formation had been considered an objective as soon as horizontal drilling took off in the late 1980s in the Austin Chalk and Georgetown formations, and companies in those plays were looking for similar carbonates that would be amenable to the same technology. The James Lime was a good, clean East Texas carbonate deposited in an extensional basin. It hosted very high porosities, sometimes soaring above 20%. And a goodly proportion of matrix porosity meant it had significant storage capacity. The formation was thick, reaching gross intervals of more than 250 feet, and covered a vast area. The James also had a record of vertical producers that couldn't be successfully offset. Too, subsurface data was deemed sufficient for prospecting. In short, the James appeared to be an excellent objective for horizontal drilling. Nevertheless, subsequent exploration has shown that nothing on the order of Giddings Field is likely to develop in the play. Instead of a massive accumulation that lends itself to dozens of rigs advancing across the countryside, so far the James appears to produce in discrete sweet spots. It is much more heterogeneous than the younger Austin Chalk, and full of its own peculiarities. Copious water production has been the bane of many wells, especially those that stepped out from areas of strong gas shows or vertical production. The first attempt to apply horizontal drilling to the James Lime was made in 1993 in Shelby County by Union Pacific Resources , a savvy and experienced operator. The company drilled a single lateral of about 3,700 feet between Huxley and East Bridges fields. Each accumulation had historical vertical James Lime producers, and the idea was that the two fields would eventually hook together. Unfortunately, the Thomas Hailey #1 well was tight, and an initially encouraging gas rate quickly declined. After an acid frac completion attempt, the well started making abundant water. UPR abandoned the play and its lease block fell apart. The James lay dormant until early 1999, when a small firm tried a short-radius lateral on the west side of Huxley Field. That too was unsuccessful. In March 1999, Textron Southwest LLC took a shot at it. The Dallas-based organization drilled a well in Huxley, and brought in the first commercial horizontal producer in the James. Today, Huxley remains the premier producing area for the James Lime, and Textron's success has sparked a wave of exploration by a host of competitors. Mike Stephenson, senior geologist, says the James was a wide-open opportunity for the little company. "We were an unknown outfit going after a play that UPR had condemned. Nobody competed with us." Textron leased everything on the Huxley structure on the Texas side that wasn't held by production. All of its leases were on primary term and had no producing wells, although they were in and around old vertical James Lime completions. Textron was drilling its third well before other explorationists realized the implications of its program. Its Sabine Shelby #1H tested 3.3 million cubic feet (MMcf) per day; its Sabine Huxley #1H tested 3.9 MMcf per day; and its Sabine Allen #1H tested 4.4 MMcf per day. At press time, the company was drilling its fifteenth well in the James play. To date, it has an unbroken string of 11 successful wells in Huxley Field. The best James wells in the Huxley area will likely recover 5- to 8 billion cubic feet (Bcf) of gas. Three of Textron's wells have already produced in excess of 1 Bcf each. Ultimates are still a guess, because the old vertical wells exhibited very flat declines. Some date back 20 years, and have steadily produced 100,000 to 200,000 cubic feet per day. "We can assume the horizontals will do the same thing, but we don't yet know what the stabilized rates will be," says Stephenson. "A couple of the weaker wells in our core block might make less than 2 Bcf, but these are still economic at today's gas prices." At Huxley, Textron believes hairline fractures are vital to the productivity of the James. And, because its little cracks are quite different than the big, open features that bisect the Austin Chalk, wells in the James can be drilled at much denser spacing than those in the Chalk. "The approved spacing in Texas for the James Lime is currently 1,200 feet between wells, and that's probably about the effective drainage area." Textron drills its wells underbalanced, using fresh water, a technique that has become common in the play. It drills deviated into the James Lime, which occurs at a depth of about 6,100 feet, and sets seven-inch casing at about 68 to 70 degrees. After coming out of casing, the wellbore is already close to horizontal. At first, the company preferred single laterals, but since it has become more cognizant of drainage characteristics, it has switched to a wishbone configuration of two laterals placed in the upper porosity lobe in the middle James. Typically, its laterals are 6,000 to 7,000 feet in length. "The James is a good formation for horizontal drilling-it's very competent, and we've never had any collapse or hole problems." Open-hole completions are the norm, as well. The biggest risk in the James is drilling a wet well, says Stephenson. Away from its core holdings in Huxley Field, Textron has attempted three wells on stepout prospects. Two were north of the Center-Shelbyville fault, a major east-west fault in Shelby County. "It turns out that's a bounding fault. All the wells north of the fault have either been wet or had very high water cuts," he says. Textron also drilled about 10 miles southwest of Huxley, near Patroon, on a different acreage block. There, it hit a water-bearing fracture, and the well watered out. This year, Textron plans to keep a rig busy in Huxley Field, where it has about 20 remaining potential locations. It also holds another stepout block that it plans to test. After Huxley, the next sweet spot was found in Louisiana on a continuation of the same structural trend. There, partners Long Petroleum LLC and Pinnacle Operating Co. Inc. have developed some strong production near the Sabine-De Soto parish line. "We seem to have ourselves in a pretty good spot," says David Benscoter, vice president of exploration for Shreveport-based Long Petroleum. "We were fortunate in that we got in the play early and we leased the prime acreage on the Louisiana side." The partners spudded their first well in May 2000 in Pleasant Hill Field in far northern Sabine Parish. The area had attracted their attention because of old wells with mud log shows from the James Lime. Their two initial wells were fairly disappointing, so the companies moved to Converse Field and drilled the Whitney Corp. #30-1. This was an area that had a history of vertical James Lime production, and this time the horizontal well was a success. The Whitney began producing in December 2000 at the rate of 2.5 MMcf per day. Two additional tests, the Ford #1 and the Sabine Uplift #1, located in adjoining Benson Field in De Soto Parish, followed the Whitney. "All three wells are on line now and they are all doing very well," says Benscoter. "Pipeline constraints have been a problem, but when given capacity, we produce them at rates of about 2 MMcf per day each. However, we have seen flow rates in excess of 20 MMcf per day while drilling." Long Petroleum's wells don't have the water problems that have dogged other areas. "Early in the play, there were no dry holes and no one knew what the minimum productive parameters were. People drilled all over the place, but as different areas were tested we started to realize that low resistivity was a harbinger of bad things to come," he says. "Where we are, in Benson and Converse fields, almost all of the James has high resistivity. We feel like we have proved up a very promising, extensive area to drill." Long and Pinnacle prefer a V-pattern for their laterals, due in part to the constraints of the square sections on the Louisiana side. To cut down on the number of surface locations, the Vs are alternated up and down, yielding an hourglass arrangement. The wells are drilled deviated into the James, which occurs at about 5,600 feet, then two 5,000-foot laterals are cut in the upper part of the productive James Lime, followed by another two 5,000-foot laterals in a lower productive interval. "We believe the fracture pattern runs basically east-west, but with the V-pattern we cannot miss the fractures regardless of their orientation. It only takes us 2.5 days to drill a 5,000-foot lateral, and we're opening up all new fractures with each one," says Benscoter. This year, the partners plan to pick up a rig in mid-June and drill approximately 15 wells back-to-back. The trend of rising rig rates and associated service costs that is being experienced throughout the industry is also affecting the James play. When Long and Pinnacle started drilling last spring, individual well costs were a little below $1 million. Now, the AFEs in the Benson-Converse area are running at about $1.4 million per well. Another successful James area is in the leg of the play in eastern Nacogdoches County. Here, the formation is deeper, thinner and higher pressured than in the Huxley area, but all of its members are present, with similar porosity development. Initially, private firm Sonerra Resources Corp., based in Nacogdoches, was working the area for Cotton Valley pinnacle reefs, says Scott Henderson, partner. When it recognized the James play was developing, it looked at the vertical well control and added that to the 50-square-mile 3-D seismic survey that it had just acquired. As luck would have it, Sonerra's acreage was quite nicely located for the James Lime. It soon added to its position, and today, together with the lease acquisition funds it manages, has a 40,000-acre leasehold. The company is three for three on its James tests, all of which it drilled in the vicinity of Kendrick Field. Its first well, the Kendrick #1-H, tested 8.4 MMcf per day; the second, the Crazy Horse #1, at 4.2 MMcf per day; and the third, the Sitting Bull #1, at 4.3 MMcf. "The James is now a development effort for us," says Henderson. "We want to maximize production and reduce costs." Generally, Sonerra is drilling two or more stacked laterals that are averaging 6,000 feet in length. Thus far, it hasn't experienced any water problems in its neck of the play. "In eastern Nacogdoches County, the resistivities in the James range between 50 and 60 ohms, versus about 15 ohms near Huxley Field." Sonerra's take on the James is that matrix porosity is the main contributor to productivity. While structural noses or flexures seem to have some relationship to the occurrence of better porosity development, the firm doesn't believe that structure is necessarily a controlling factor in the play. "We think the better areas will obviously be where the matrix porosity is better developed. Our experience so far is that the majority of the sustained production is coming from the matrix itself, and open fracturing is not as prevalent as we originally anticipated." Consequently, fracture stimulation is a direction that Sonerra will pursue. On its next well, the firm plans to test techniques that have been successful in areas as diverse as West Texas, Canada and the North Sea-it will try a number of isolated hydraulic fracture treatments along the length of a lateral. Sonerra is currently running one rig, and in midsummer it will add another and keep both active. It hopes to ultimately drill up to 40 wells. Costs, a moving target, are now in the range of $2.2 million for one of its completed multilateral producers. "There's still some debate about the ultimate recoveries, but to be conservative we estimate 3- to 4 Bcf per well in our area," he says. Indeed, the potential of the James Lime to deliver those kinds of reserves over sizeable areas means it could impact the bottom lines of even very large independents. One such firm, Denver-based Tom Brown Inc., has just announced two discoveries on projects in both Shelby and Nacogdoches counties. Both are currently waiting on connection to pipelines. Tom Brown started working in the play in late 1999, and presently holds about 45,000 net acres on the Texas side. Its two project areas were significant step outs from areas of vertical James Lime production, but both were keyed off of show wells that tested gas from the James on drillstem tests. In Shelby County, the company's Patroon Bayou #1, located about four miles west of Patroon, flowed at the rate 2.3 MMcf of gas, 106 barrels of oil and 137 barrels of water per day, says Pete Scherer, Midland-based executive vice president and general manager of the southern region. "Our flowing tubing pressure was 1,240 psi, and we believe that some of that water was still drilling fluid." True vertical depth to the James is about 7,000 feet in this area. Tom Brown drilled the well with two stacked laterals oriented north-south, one about 6,000 feet in length and the other, 5,000 feet. In Nacogdoches County, the company's Loco Bayou #1, about 12 miles south of Nacogdoches, flowed 5.1 MMcf and 318 barrels of water per day. "Our flowing tubing pressure was 2,700 psi, and most of the produced water was drilling fluid." This well has a single 6,000-foot lateral; vertical depth to the James is about 9,000 feet. Presently, Tom Brown is drilling another well on the same lease block, about three miles northwest of the discovery. The firm planned to drill three James wells this year; it has now upped that total to six. Completed wells in its areas currently cost $1.7- to $2.3 million, so the investment is appreciable. "We now have commercial initial rates on our two tests, but obviously need some production history to determine the reserve potential of these wells," says Scherer. "We're modeling the wells after the Huxley area, yet we don't know if our producers will perform in a similar manner. "At this point, we're cautiously optimistic about the James." Kevin Curtis, partner in Austin-based CG Operating Inc. , a private exploration and production company, also works the Texas side of the play. CG's strategy is focused on generating 3,000- to 5,000-acre prospects in favorable areas. This July, the firm will spud a test in Nacogdoches County on a salt-related structural feature similar to Trawick Field, albeit much smaller. "The James gets tighter in the western part of the play, and we believe that as we begin to lose some of the matrix porosity, it's important to be on a structure in order to optimize fracture potential," he says. CG's well plan calls for two stacked laterals of 4,000 feet each, drilled to the north and south, with total lateral in zone of 16,000 feet. Depth to the James is about 7,800 feet, and the formation is 170 feet thick. Following that test, the company will spud a well in Sabine County. Given the many unknowns in the James play-the ultimate recovery of the horizontal wells, the optimum drilling and completion program, and the uncertain tangible and intangible drilling costs-prudence is in order, says Curtis. "Operators that can drill James Lime wells as cost effectively as possible are going to come out better in the long run. Because it's still so difficult to predict how the wells will perform, we try to gear our prospects and trades to deliver a six- to 12-month payout. Getting capital back quickly is important." Certainly, an enormous amount of money has already been spent in the James Lime, and a great deal more will be spent this year and into the next. How far the play develops depends on the interplay of many complex factors, and questions certainly remain. There's no doubt, however, that now is an excellent time to be drilling gas wells.
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