According to an October 2012 Bernstein Research report, the Smackover/Brown Dense resource play in Arkansas and Louisiana will not be the next Eagle Ford or Bakken — but it is intriguing, even without headline results.

“We still view the Smackover as potential upside rather than a game-changing new opportunity and believe investors on average are discounting poor results, not great results. We note that if 100,000 acres of Brown Dense were to achieve success-case economics, it could mean $2- to $3 billion of value to the company possessing it,” the report’s authors say.

The play’s entry cost is low and it is a good opportunity, according to Bernstein. However, more results are needed to confirm the play’s value.

“With successful identification of key drivers of rate/recovery, operators will extract economic value,” the report stated. The analysts see acreage in the play as a net positive for operators Southwestern Energy Corp. (Houston), Devon Energy Corp. (Oklahoma City) and COG Operating LLC (Midland, Texas).

Comparison with Tuscaloosa Marine Shale

Limited public information about recent Smackover/Brown Dense completions to date, along with similar information about the highest-rate wells from the Tuscaloosa Marine shale, suggest that “Smackover wells drilled so far have averaged fewer stages and used less sand than the best Tuscaloosa Marine shale wells, making us more optimistic on the prospects of this emerging resource,” the report notes.

Southwestern’s BML #31-22 had an initial production rate of 903 barrels of oil equivalent per day, after 19-stage fracturing that used 4.9 million pounds of sand. A comparable Tuscaloosa Marine well producer (Anderson 17H #1 at 933 barrels of oil equivalent) had 31 stages of fracturing and used almost 12 million pounds of sand, according to Bernstein.

Smackover/Brown Dense Discoveries

In April 2012, IHS Inc. reported that a Southwestern Energy well (#1-15H Roberson 18-19) in Columbia County, Ark., initially produced from eight of 11 fracture-stimulated stages for the first 20 days of an expected 20- to 30-day cleanup period. On the eighth day of testing, the well had a 24-hour rate of 103 bbl. of oil, 200,000 cu. ft. of gas and 1,009 bbl. of water (45% of load recovered to date). Drilled to 12,878 ft. (9,369 ft. true vertical) the well has a 3,600-ft. north-trending horizontal leg that landed in the lower third of the zone. Subsequent core analysis indicated this section had some of the lowest permeability in the entire interval.

Also according to IHS Inc., Dallas-based AIX Energy Inc. completed #1 Garrett L&T in Claiborne Parish, La., which was tested flowing 800,000 cubic feet of gas, 110 barrels of 58-degree-gravity condensate and 10 barrels of water per day through Lower Smackover/Brown Dense perforations at 11,442-75 ft.

“Key risks for the Smackover/Brown Dense include organic richness, reservoir fracturability, and perhaps risk of hydrogen sulfide gas,” according to the Bernstein report. “Despite the Brown Dense being the source of billions of barrels of conventional oil, it is not highly organic rich. The diffuseness of the organic matter (low TOC %) coupled with reservoir type (mudstone) may reduce the ability for hydraulic fracturing to work effectively. In addition, the presence of hydrogen sulfide in the Smackover trend is a risk, not yet encountered in the Brown Dense, though.”

Play History, Geology

The Lower Smackover/Brown Dense formation is an Upper Jurassic-age, kerogen-rich carbonate source rock found across the Gulf Coast region of the southern U.S. from Texas to Florida. The region of Arkansas and Louisiana has produced oil and gas from the Upper Smackover since the 1920s. The Brown Dense formation is the source rock for these Upper Smackover fields. It has the critical properties necessary to be a successful play and compares favorably to other productive oil plays in the U.S. However, it has never been exploited with horizontal drilling technology until now.

According to the Arkansas Geologic Survey, the Smackover formation takes its name from Smackover Field in Union County, Ark. There, the formation is 700 feet thick. Its upper portion is composed of shallow-water carbonates such as oolites, chalky limestones and corals. For many decades, explorers have targeted high-quality zones in the upper Smackover, and most existing Smackover fields in the region produce from porous oolite zones.

The lower member of Smackover is an extremely fine-grained carbonate mudstone, often called the Brown Dense. The lower and middle mudstone beds are excellent source rocks. They are quite thick, thermally mature and rich in kerogen, according to work done by Ernest Mancini, research professor at Texas A&M University. Much of the oil and gas produced in the North Louisiana Salt Basin has been generated in these mudstone beds.