Austin Chalk and the Tuscaloosa Marine Shale- A Winning Combination?
The Austin Chalk is a formation that essentially overlays the Tuscaloosa Marine and Eagle Ford shales meandering from Mexico through South and East Texas on through central Louisiana, nipping Southwest Mississippi, and ends at the Gulf of Mexico near Mobile. The formation has mostly generated oil and gas in Texas and Louisiana over the years from as far back as the 1960’s, but increasing knowledge and technology has created a growing interest in its possibilities, especially with horizontal drilling and fracking.
Because of the close proximity of the TMS and the Austin Chalk the possibility of multiple formation wells has been suggested, meaning that from one drilling pad, one vertical hole, one set of tanks and other surface production equipment, there can be two laterals into two different formations producing oil and/or gas.
Moreover, even if these combo wells are rare, just the increased drilling in an area could open the door to more infrastructure in place.
That is, the supporting companies and facilities needed to drill, fracture and produce wells in an area become more economically feasible and thus more likely to exist, which, in turn decreases the costs of wells, which, in turn, increases the likelihood wells will be drilled, which continues to improve the economics going forward.
For example, hauling frack sand or chemicals to Southwest Mississippi from Shreveport or Lafayette is more expensive than hauling it from say, Osyka or Liberty, Mississippi or Clinton or Kentwood, Louisiana. So, success in one formation will likely lead to success in another as costs to produce come down. These two plays essentially help each other.
But, we are getting ahead of ourselves. I’ve mentioned in earlier writings that Australis Oil and Gas acquired mineral leases from Encana Corporation and has been accumulating leases for over a year and has announced plans to begin drilling 4-10 wells starting in the 3rd quarter of this year.
I have not mentioned that a Austin Chalk leasing frenzy entered our area late last year from the west and is continuing to spread eastward with slowly decreasing energy. Nevertheless, I’m aware of at least three companies besides Australis in Amite County now making significant lease offers. The offers are targeted mostly in Township 1 South and Ranges 2 and 3 East, but it wouldn’t surprise me to see these leases extend further north or east.
However, Conoco Phillips seems to be the biggest player in the Austin Chalk play at this time, at least in our area, having announced in early April the ownership of 245,000 acres that appears to include at least some in the Florida Parishes, though much of this acreage is likely located across the river in Avoyelles, Pointe Coupee and adjacent parishes.
I’m told Conoco Phillips has plans to drill over 20 wells in the foreseeable future in central Louisiana, which I am told will include some wells in the Florida parishes. Their official announcement was that they expected “to drill several exploration wells…starting in 2018…funded from within the company’s...budget.”
It’s still early to get too excited about both the TMS and the Austin Chalk, but $70 prices for Louisiana Light Sweet Crude oil and tens of millions of dollars spent on leases with more on the way certainly is encouraging.
Stay tuned!
