?The Barnett shale trend in the Fort Worth Basin of north-central Texas represents one of most prolific onshore gas fields in the U.S. The play covers approximately 5,000 square miles, primarily in four Texas counties—Wise, Denton, Tarrant and Johnson.


Production from the Barnett has significantly increased in the past 18 months from 2.3 billion cubic feet equivalent per day from more than 6,500 wells to 4 billion per day from 10,400 wells, an increase of nearly 75% in production and almost 40% in the number of wells.


The shale has a cumulative production of more than 4.6 trillion cubic feet equivalent, with approximately 3.9 trillion having been produced just since 2000. Production and reserve increases have occurred as a result of new developments in hydraulic fracturing, horizontal-drilling technology and the application of 3-D seismic. The productive area has rapidly grown in the past several years, expanding into many urban areas, including the city of Fort Worth, and away from the core productive area of Newark East Field in Tarrant County.


Attractions, challenges. The attraction to the area includes the large estimated potential of some 30 trillion cubic feet equivalent of gas, extensive infrastructure and improvements in drilling and completion technology. Although the Barnett underlies approximately 17 counties, only five have been extensively developed, offering opportunities for extended growth. Each county may have potential for further development.


Challenges include land access and urban development, environmental issues and gas-price sensitivity. Developing the shale within urban areas has created a unique set of land-access issues. Royalty rates and bonus payments have increased in the basin during the past few years.


Geology. The Barnett is Mississippian in age and occurs at between 6,500 and 8,500 feet, with thicknesses ranging from 50 feet to as much as 1,000 feet in the northeast. The interval is lithologically variable and consists of siliceous shale (the primary reservoir), limestone and minor dolomite.


Permeability is low—generally less than 0.1 millidarcy—with average porosity of 5% to 6%. The variability in permeability and porosity across the play is critical to understanding well performance. The majority of the production has been from the northern portion of the basin, where the shale is more than 300 feet thick, has a total organic content (TOC) of more than 3% and is thermally mature.


The northern region of the play is also an area in which the shale is encased in dense limestone—Marble Falls stratigraphically above and the Viola below—that helps to contain induced fractures through hydraulic-fracture applications. However, as the play has moved away from the core area, operators have designed wells and completion techniques to avoid communication with water-bearing zones in the absence of Viola.


Operations, technology. Horizontal wells, some drilled from multi-well pads, currently dominate the trend and allow for better recoveries and help to avoid surface obstacles in urban areas. The horizontal laterals are from 2,000 to 3,000 feet and are coupled with multi-stage fracs. Horizontal wells designed with multiple, relatively small, hydraulic-fracture treatments have been effective in avoiding water-bearing zones in the absence of Viola limestone in counties south of the core area.


3-D seismic has become useful to better understand both the reservoir and local structure. Through the use of advanced drilling and completions technology, extensive existing infrastructure and excellent market access, the Barnett will continue to be a successful long-life, producing region.


Top producers. Devon Energy Corp., through its acquisition of Mitchell Energy & Development Corp. in 2001, is the top producer in the area, with 28.2% of total gross operated production. Quicksilver Resources Inc. became a large producer through its recent acquisitions for $1.31 billion, and now controls 4.4% of gross operated production.


Transaction activity. Between 2003 and 2006, there was a scramble to acquire unleased acreage in the Barnett. Since then, producers, such as Devon, Quicksilver, XTO Energy Inc., Chesapeake Energy Corp. and Range Resources Corp., have been active in acquiring smaller private companies, thus consolidating their positions in the region.


The majority of recent transactions have been made by existing producers, since land access is such a large issue for a new entrant. Transaction metrics in the region are highly sensitive to location within the play, with the most geographically aggressive metrics paid in Tarrant and Denton counties.


—Shaun Finnie (832-476-6407), David Cecil (713-437-5063) and Adrian Goodisman (713-437-5050), Scotia Waterous

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