Snapshot: Fayetteville Shale

Fayetteville Stats

Active Companies

Following on the heels of the Barnett Shale, the Fayetteville Shale play in northern Arkansas is the second-largest gas shale play in the US.

The formation covers close to 10,000 sq miles, about half of which is highly prospective. It also offers a great break for operator expenses. The thickest part of the shale lies in the shallower area, and the central part of the play in Conway, Van Buren, and White counties generally is considered the most prolific area.

Southwestern Energy Co. (SEECO) gets credit for the first Fayetteville well, drilled in 2004, as the company followed the Oachita Thrust trend and saw similar characteristics in the shale to the prolific Barnett in northern Texas. The company took an early advantage and amassed the largest position in the play at modest prices.

It didn't take long for other companies to hop on SEECO's bandwagon. Wells completed rose from 13 in 2004 to more than 600 in 2007 as production climbed from 100.6 MMcf of gas in the first year to 89.2 Bcf of gas in 2007. By the end of the period, more than 1,000 wells had been in production.

According to Arkansas Oil & Gas Commission records, the best-producing well by June 30, 2010, was the Hall Phoenix Energy LLC Disman 1-7D. It started producing in January 2007 and had given its owner 2.86 Bcf of gas. In the same report, SEECO had two wells that topped 2 Bcf of gas in cumulative production.

“Worldwide Gas Sales and Unconventional Gas: A Status Report,” presented by Advanced Resources International in December 2009, estimated production from the Fayetteville at 1.4 Bcf/d of gas in 2009 and 1.8 Bcf/d of gas in 2010.

An ICF International report for The INGAA Foundation Inc. titled, "Availability, Economics, and Production Potential of North American Unconventional Natural Gas Supplies," released in November 2008, noted the National Petroleum Council resources report of 2003 didn't even mention the Fayetteville Shale.

In an independent evaluation, ICF estimated recoverable resources at 58 Tcf, compared with 107 Tcf for the Barnett and 53 Tcf for the Woodford Shale in Oklahoma.

The Woodford Shale number was based on detailed mapping of the area and well-production analysis. The 2008 "Clean Skies" report assigned a mean 26 Tcf and a maximum 41.6 Tcf of recoverable gas, while a 2008 Energy Information Administration report set the recoverable figure at 29.18 Tcf of gas.

ICF estimated unrisked gas in place in the Fayetteville at 719 Tcf with a risked 169 Tcf of gas in place.

SEECO clearly was the top operator in the play with some 850,000 acres of leases and gross production of about 400 MMcf/d from the Fayetteville in 2007, according to the ICF report. By that time, the company had drilled 533 of the approximately 1,000 total wells, including 426 horizontal wells completed with slickwater fracture treatments.

The company's average lateral at the time reached 3,300 ft, and a completed well cost about US $3.05 million. It claimed an average recovery on its more recent wells of more than 1.5 Bcfge.

Its wells tapped eight Arkansas counties in a spread 140 miles long from west to east and 30 miles wide from north to south for a 4,200-sq-mile swath.

The company also had determined the Mississippi Embayment on the eastern side of the play didn't produce nearly as well as the core area, ICF said.

By 2010, the average length of a lateral had grown steadily to an average 4,532 ft. Meanwhile, the company developed a system. Only 15 of its rigs were capable of drilling horizontally, but it used the other nine rigs to drill the vertical sections of its wells.

It planned to spend $1.5 billion in the Fayetteville in 2010. That would buy 650 to 680 gross wells, 475 to 500 of them operated by the company.

It also built up its infrastructure. The company gathering and pipeline system carried 1.62 Bcf/d of gas through 1,367 miles of line on Aug. 2, 2010, up from 1.06 Bcf/d of gas through 960 miles of line the previous year.

Chesapeake Energy Corp. was the second-largest operator in the play in August 2010, according to the company website.

It planned to run 10 rigs to drill approximately 85 net wells during 2010. It had operated 18 rigs in 2009, and it planned to use eight rigs from 2011 in the future as it met its goals in establishing land held by production.

The company signed a 75-25 joint-venture agreement with BP in 2008 for $1.9 billion in cash and drilling carries. BP had contributed 100% of its carry obligation by the end of 2009, according to an August 2010 Chesapeake presentation.

Among the company's recent significant wells in August, Chesapeake completed the 7-16 2-2H in Conway County for a peak rate of 7.3 MMcf/d. It completed the Ransom 7-8 1-21H16 in White County for 6 MMcf/d of gas and the Heggie 7-9-5-12H1 in White County for 4.9 MMcf/d of gas.

The third-largest operator in the Fayetteville play, with 157,000 net lease acres and more than 2,500 drilling locations, was Petrohawk Energy Corp.

The company said Fayetteville thickness ranges from 100 to 500 ft at depths of 1,500 to 6,500 ft on its property.

It held 299 Bcfge in proved reserves at the end of 2009 and 1.4 Tcfge of resource potential at an EUR of 1.6 Bcfge per well.

Petrohawk planned to spend $1.35 billion in capital expenditures in 2010, with 63% going to the Haynesville play where the company still is fulfilling drilling obligations to hold land, 29% in the high-return Eagle Ford, and 6% in the Fayetteville play.