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In My Back Yard, Please: DFW Looks to Drill for Gas

26 December 2005

Barnett_shale_1
The Barnett Shale Field outlined in red, with producing wells as red dots.

The Fort Worth Star Telegram reports that officials at Dallas/Fort Worth Airport—the world’s third-busiest—are looking to move into the natural gas business. The airport’s 18,076 acres sit atop the eastern edge of the Barnett Shale, which has emerged as the largest natural gas field in Texas.

Neighboring Fort Worth Spinks Airport recently signed a lease on its 822 acres for natural-gas drilling. The Fort Worth City Council last week approved the deal, which includes a $3 million one-time bonus payment and about $1.7 million in annual royalties for the airport.

“We have huge expectations,” said John Terrell, D/FW’s vice president of real estate, who’s methodically leading the airport’s charge into the gas-drilling business. “We have 18,000 acres under our control. You don’t find that throughout the rest of the Barnett Shale. That’s what’s actually bringing in the major international players.”

Shalesystems_1
Barnett is one of many shale source-reservoir systems in the US

Black shale is rich in organic material that provides the source biomass from which oil and/or gas are derived via:

  • Bacterial decomposition of organic matter to dry gas;

  • Primary thermogenic decomposition of organic material to oil and gas via time, temperature and pressure;

  • Secondary thermogenic cracking of oil to gas.

The Barnett Shale is a thermogenic reservoir. The thermal maturity of a reservoir can help determine whether it contains oil, gas, or no hydrocarbons. Thermal maturity is measured in the lab using core samples by vitrinite reflectance (RO), with higher numbers indicating a greater likelihood of gas. A reading >1.0 usually indicates the gas window, while a reading >1.4 indicates dry gas. An RO range between 1.0 and 0.6 indicates an oil window; a reading <0.6 indicates the reservoir is too immature to produce hydrocarbons.

Test indicate a high RO in the northeast region of the Barnett system, which could include the DFW area.

Barnett Shale, which sprawls beneath 10–15 Texas counties, is about 4.5% oil and gas by weight. Estimates peg its total shale gas in place at 26.7 trillion cubic feet (Tcf), with between 3.4–10 Tcf of that recoverable. Currently Barnett production is about 1.2 billion cubic feet per day (bcf/d), accounting for >2% of domestic natural gas production.

Because the rock matrix is composed of fine-grained rocks, reservoir permeability (flow capacity) is often low in organic shales and commercial production of gas often requires the presence of natural fractures and/or artificial cracks forced by hydraulic fracture treatments. Due to the low permeability, recovery from organic shales can be very low…sometimes <10% of the original gas in place.

Barnett is a“tight” (ultra low permeability) reservoir; it needs to be hydraulically fractured in order to be productive—i.e., to be able to allow the gas to escape.

Although the first Barnett Shale discovery well was drilled in 1981, it was almost 17 years before any significant commercial success was found in the Barnett. It was the refinement by Devon Energy—which is now the leading producer in the Barnett Shale—of a technique called light sand fracturing (LSF) combined with horizontal drilling that have driven the explosion in activity in the Barnett Shale. About 75% of the producing wells in the Barnett have been drilled since 2000.

Prior to light sand fracturing, most Barnett Shale wells were completed with massive hydraulic fracture treatments using crosslinked gelled fluids carrying a few hundred thousand pounds to more than one million pounds of proppant.

Fracstim
Light sand fracturing combined with horizontal drilling

Because of the extremely low permeability of the Barnett, its inability to efficiently clean up fracture damage from gels, and the high cost of massive hydraulic stimulations, most Barnett treatments did not provide an adequate investment return.

In 1998, Devon Energy began experimenting with light sand fracturing, which was an older fracturing technique that was gaining new acceptance at the time in East Texas. In light sand fracturing, crews inject a mixture of fresh water and sand into the shale at a very high pressure. In the Barnett Shale, this technique provides a much larger surface area of contact with the reservoir and minimizes fracture face damage resulting in improved productivity. Today, nearly every Barnett treatment is performed using light sand fracturing or some variation of this technique.

The airport. D/FW is looking for a deal on the order of a one-time cash bonus of $72 million, with about $27 million to $34 million a year in royalties when it reaches full production. That would rank natural-gas drilling as one of the top revenue generators at D/FW. Concession sales, the third-largest category, bring the airport $33 million a year. The airport had $475 million in total revenue during the fiscal year that ended in September.

D/FW plans to put out its request for proposals to selected candidates by March or April, and hopes to award the deal to a drilling company by midsummer.

Several dozen wells are recently finished or are about to start under Fort Worth’s two other airports, Alliance and Meacham. Airports in Oklahoma City and Tulsa are also drilling for oil.

The largest airport drilling for oil and gas is probably Denver Airport, which has worked hard in the past five years to boost nonairline revenue after its largest tenant, United Airlines, filed for bankruptcy. Since it opened 10 years ago, Denver has brought in about $1.7 million a year from drilling on its 33,000 acres.

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December 26, 2005 in Natural Gas | Permalink | Comments (2) | TrackBack (0)

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Comments

Good. Let's drill in other back yards. I vote for Malibu.

Punch a big hole right in the middle of Crawford Ranch.

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