Take a stroll through the exhibit area at any of the bi-annual NAPE confabs and it’s a given that you’ll encounter a host of attractive drilling prospects on display – perhaps something that might even offer the potential to get in on the ground floor of a whole new play.
The recent NAPE event in Houston in February was no exception.
Consider David Petroleum, for example, which in conjunction with Cuervo Exploration was showing a deal in New Mexico’s Tucumcari Basin that was creating a lot of buzz.
That seems appropriate, in two ways:
- NAPE is a place where people come to seek the latest opportunities.
- New Mexico in general appears to be increasingly attractive to the E&P community these days.
For starters, New Mexico boasts a spate of natural gas reservoirs known to harbor an unusually high concentration of helium. In fact, it’s being postulated the state could become a major producer of this strategic element (see February EXPLORER).
Something Old, Something New
When it comes to hydrocarbons per se, the as-yet-unproductive Tucumcari Basin has become an attention-grabber.
Call it a new old play.
The basin, which sprawls across an area of 5,000 square miles or so in east-central New Mexico, has been the site of on-again, off-again exploration action since 1909, according to AAPG member Ron Broadhead, principal senior petroleum geologist at the New Mexico Bureau of Geology and Mineral Resources.
In the latter half of the century, the basin experienced several rounds of deeper exploratory efforts using rotary drilling technology, according to Brian Brister, another AAPG member and a geologist at Gunn Oil Co. and Cuervo Exploration.
Those wells encountered numerous oil and gas shows.
The industry boom times of the early 1980s lead to renewed interest in the basin, which resulted in several small but significant gas discoveries, Brister noted. But the lack of a pipeline in conjunction with the precipitous oil price drop during the middle of the decade put an end to this exploration phase.
There’s nothing like rising oil and gas prices to trigger renewed enthusiasm for an area with such a checkered drilling history.
“The New Mexico State Land Office sponsored research by the New Mexico Bureau of Geology and Mineral Resources that ultimately stimulated higher bid prices at auction in a ‘mega sale’ in 2003,” Brister said.
“Much of the state and federal lands were leased throughout the basin, and several companies began to make their holdings contiguous by filling in with fee holdings by leasing the larger ranches.”
During this spate of activity CKG Energy drilled eight wells – including some that were sited along Interstate 40 where they flared gas, which Brister called “an unavoidable public display of the potential future of the region.”
These wells are currently shut-in by current owner Tucumcari Exploration.
A number of companies are marketing prospects and leaseholds in the region, according to Brister. He noted also that some larger independents appear to be contemplating a move into the area.
A Fine Romance
The ongoing main event these days is a well operated by SWEPI (Shell), which re-entered a borehole drilled in 2006 by Cuervo Exploration, which had encountered shows in this well and also two other wildcats.
Thirty-foot flares reportedly have been spotted from the Shell operation, and the company has received approval from the New Mexico Oil Conservation Division to conduct additional flaring.
“This is the well that at the moment has the most romance to it in terms of a well that has been drilled, pipe run on it and we know significant completion efforts are going on with it,” said Bill Owen, vice president/exploration manager at David Petroleum.
Given an average density of approximately one sufficiently-deep wildcat well per township, the basin is grossly under-explored, according to Brister.
It’s a challenging area.
“The primary source rocks appear to be Pennsylvanian black shale deposited within narrow strike-slip derived sub-basins beneath the broader and shallow Permian Tucumcari Basin,” Brister said. “Some sub-basins may require wells 14,000 feet deep to test all objectives.
“The key to exploration is to delineate the sub-basins and determine the discreet petroleum system related to each.
“Targets range from gas in deep basin-centered tight sandstone to basin-flank and flanking uplift conventional traps of migrated gas and oil,” Brister said. “Where oil has migrated into the shallow Triassic fresh water aquifer, it is biodegraded to heavy oil or tar.
“The Cuervo-SWEPI apparent discovery targeted one of the sub-basins (known as the) Cuervo graben, but there are numerous, probably similar basins based on existing well and seismic data.”
Exciting Prospects
There’s still acreage to be had, but Owens noted that most of the large blocks of acreage in the areas they consider to be prospective are leased.
In fact, David and Cuervo, along with their respective partners, have snapped up close to 16,000 acres surrounded by at least 18 wells with numerous shows within the primary Pennsylvanian targets, according to Owens.
He noted the group has interpreted 200 miles of seismic on a prospect having multi-pay potential and more than 1,200 feet of siliciclastic-rich Pennsylvanian section.
“We anticipate 2008 to be a very exciting year for the basin,” Owens said. “This is a large basin with tremendous potential, but these things take such a long time to do and the clock is always ticking on people’s leases, including Shell.
“Knowing, as we believe, that they have some type of significant discovery and they have made such a significant investment by the acquisition of more than 30,000 acres in their area of interest in addition to spending a huge sum of money on that well,” Owens said, “we think this year they’re likely to drill a good number of wells up there to help them determine the areal extent of their field.
“It’s going to take substantial drilling in the basin to justify the infrastructure necessary to get the product out, and that’s why all of us are pleased to see Shell in the play,” Owens noted. “And, it’s exciting to have a major like this coming back in to the continental U.S.”
But revving up the action in the region may be a slower process than desired.
“Another complication of dealing in a new horizon like this is there’s not a lot of drilling crews available for that area,” Owens said. “Most of them will have to be brought in from northwest or southeast New Mexico or Oklahoma.
“But this is an opportune time for companies – especially large ones – to look to the future and take the chance that this may be one of the newer, larger fields to be discovered in many years.”