If you liked what horizontal drilling and fracture stimulation did for shale gas plays, you’ll love what they are doing for tight gas.
Case in point: the Granite Wash.
This decades-old tight-sands play about 160 miles long and 30 miles wide covers parts of western Oklahoma and the Texas Panhandle – and horizontal drilling there has produced some exceptional rewards lately.
Last July, LINN Energy LLC of Houston reported the results of its second operated horizontal well in the Stiles Ranch area of Wheeler County, Texas. The well tested at a 24-hour production rate of 27 million cubic feet of natural gas and 3,190 barrels of condensate, and yielded 3,530 barrels of natural gas liquids after processing.
“We believe this is the highest-rate well reported in the Granite Wash trend to date,” said Arden Walker, the company’s chief operating officer.
The well results caused some people in the industry to say, “Huh.”
It also led LINN Energy’s president to remark that the results were “considerably above what we expected.”
Then in November, Apache Corp. reported that its first two horizontal wells drilled in the Hogshooter section of the Granite Wash in Beckham County, Oklahoma, each produced more than 2,000 barrels of oil and three million cubic feet of gas per day. Both were drilled to a total vertical depth of about 11,000 feet.
ONEOK Partners of Tulsa announced in December it will spend up to $240 million by the first half of 2012 on midstream projects in the Granite Wash and nearby Cana-Woodford Shale plays.
And Chesapeake Energy Corp. of Oklahoma City said its average gas production rate from Granite Wash wells in the Texas Panhandle had jumped from 1.77 million cubic feet a day in 2007 to almost 7.79 million cubic feet a day in 2010.
Earlier wells were vertical, often drilled through the younger Granite Wash on the way down to targets in the Atoka or Morrow. So far, LINN Energy has concentrated on the upper zones of its Granite Wash acreage in the Stiles Ranch area.
“We think the Granite Wash has significant potential,” Walker said. “It’s a 3,000-foot-thick zone, so there are numerous horizons to target.”
The company plans to spend almost half its 2011 drilling budget in the Granite Wash, according to Walker. It expects to drill 35 gross operated horizontal wells in the play and participate in numerous non-operated wells this year, completing three to four operated wells every month.
The company has seen rates of return in the play of 50 percent to over 100 percent, he noted. LINN Energy has access to about 73,000 net Granite Wash acres – most held by production – across Texas and Oklahoma.
Hot and Cold
Operators emphasize the Granite Wash play is completely different from shale gas. But there are eerie similarities between the technologies used to drill, stimulate and complete both types of play.
An obvious similarity is the play’s low-permeability nature.
“This is a tight sand, and although its permeability and porosity are low, the reservoir quality and porosity are better than those found in most shale plays,” Walker said.
With larger pore throats, “the resulting high condensate yields have a favorable impact on the economics of the play,” he added.
Early in the development of the Granite Wash, the industry was drilling laterals of around 2,000 feet. Advances in horizontal drilling technology have substantially increased the lateral lengths.
LINN Energy now drills 4,300-4,500 foot laterals.
“We learn more about the Granite Wash with each horizontal well we drill,” Walker noted. “It’s a continuous learning process.”
Granite Wash operators also tend to favor the high-volume, slickwater fracs common to many shale plays, and LINN Energy is using 10-stage to 14-stage frac jobs per well, he said.
Despite the long history of the Granite Wash (over 2,600 wells producing), its horizontal development is still in the early stages of data-gathering and analysis.
“The best targets in one area will not necessarily be the best targets in other areas,” Walker said. “It will take additional geological and petrophysical analysis to better understand this trend.”
Charlie Smith, senior account leader for Halliburton Co. in Oklahoma City, said he has seen the industry go through several cycles of interest in the Granite Wash. He’s working to put together a panel of Granite Wash experts for an AAPG event later in 2011.
“Unless you happened to hit a very prolific section of that reservoir, you didn’t do very well. And it was difficult to map from hole to hole,” Smith said.
“Historically, the play would get hot and cool off, get hot and cool off,” he added.
Advanced capabilities in horizontal drilling, effective stimulation and the presence of liquids all have boosted the allure of the Granite Wash.
“In my opinion, the thing that’s really made the economics attractive is the advancement in horizontal drilling techniques,” Smith said.
Walker’s advice to anyone interested in the Granite Wash play is to “assemble a multi-disciplinary team to gain a good understanding of the petrophysics, the geology and the reservoir, and a talented execution team to drill, complete and produce these challenging wells.”
AAPG member G. Randy Keller is director of the Oklahoma Geological Survey at the University of Oklahoma in Norman. He called “Granite Wash” a catch-all term for many types of formations and a wild mix of geology.
“The interesting thing about the Granite Wash is that it’s very hard to define,” he said. “Geologically, I think of it as a garbage pail term for a lot of tight formations out there. The structures are big and the geologic histories therefore complex.
“If we think we know all about the geologic history of these areas, we’re delusional,” Keller added.
In the classic interpretation, he noted, the Granite Wash came from wash or detritus off the Wichita-Amarillo Uplift, producing grains that settled into the tight formations characteristic of the play.
“As you approach these big uplifts, things get a lot more conglomeratic. They don’t call it the Granite ‘Wash’ for nothing,” Keller said.
Smith said the Wash includes “high-energy areas where you have these overlapping (alluvial) fans that come down,” from a mountain-front erosional process.
“You can go out in New Mexico and see some really nice events (similar to the ones that shaped the Granite Wash) happening just like that at the current time,” he observed.
Local geology can produce just about any type of surprise imaginable.
“Some of the things we’ve drilled have essentially been boulder beds,” said AAPG member John Mitchell, Anadarko Basin asset team manager in Tulsa for SM Energy Co., formerly known as St. Mary Land & Exploration.
“The Upper Morrow chert sandstones in Wheeler and Hemphill counties in Texas and Roger Mills and Beckham counties in Oklahoma are the oldest and most prolific Wash reservoirs, although they are not always recognized as Wash deposits,” Mitchell said.
At the same time, the Atokan age Granite Wash in Beckham County contains a substantial amount of dolomite, he added.
Across the entire play area the Wash “changes vertically and horizontally – it’s very complex. It is 50 or 70 different sandstone or conglomerate sections, developed locally,” Mitchell explained.
“It’s fascinating,” he added, “but it’s a challenge.”
Similar – But Different
In addition to providing a source for the oil and gas, the interbedded marine shales have turned out to be a blessing for mapping the Granite Wash, according to Mitchell.
“The patterns of complexity are broken up by these high-stand shales that provide excellent markers,” he said.
But the play is distinctly different from shale gas plays, Mitchell observed.
“We have more storage than shales, I think,” he said. “It is a sandstone, a conglomerate. We do have more porosity.”
While the need for water supply for high-volume fracs is similar to shale plays, operators in the Granite Wash can see more injected water coming back from a formation, he said.
“The shales tend to absorb a lot of water because they’re so desiccated. In the Granite Wash you tend to get a lot of load water back,” Mitchell said.
“I think water management is increasingly going to be an issue,” he added.
Today, the Granite Wash is already generating buzz as one of the most attractive play areas around, with favorable economics thanks largely to the presence of condensate, natural gas liquids and even oil.
Operators benefit from a chance for strong production, good access, a long history in states that favor hydrocarbon development and growing infrastructure.
Also, the application of advanced techniques developed for shale-gas production doesn’t hurt.
“If we’re successful,” Mitchell said, “we’ll be drilling wells out here for the next few decades.”