Following many years of on again/off again activity, the Tuscaloosa Marine Shale (TMS) was, at long last, being proven in recent months to be a viable commercial play.
The Cretaceous-age TMS, which occurs across central Louisiana and into southwestern Mississippi, is age-equivalent to the Eagle Ford formation in Texas.
While the Eagle Ford play has been a kind of bonanza for the shale operators, the TMS has presented more than its share of issues to overcome with regard to cost, drilling and production. In turn, this impacts the bottom line for operators, who recently have incurred about $100,000 well-per-day drilling cost.
AAPG member Kirk Barrell, president of prospect-generator Amelia Resources in The Woodlands, Texas, has 24 years of experience in the famed Tuscaloosa natural gas trend.
"I'm as optimistic as I've ever been," he noted in August last year about the TMS.
That was then.
Since that time, the operators' world has done a 180-degree spin owing to the unanticipated, near-devastating drop in oil prices.
Arrested Development
Among other altered plans, new activity has been squelched in some plays, particularly shales, where break-even oil prices vary widely.
The TMS requires hefty budgets.
"From a philosophical, but not economical, standpoint, I'd say $90 is the threshold that many feel the play needs to continue the activity it was getting," Barrell said.
"This was such bad timing because we were seeing great results, like 1,100 to 1,500 barrel-per-day wells," he noted. "Operators were drilling faster, and we were seeing some consistencies."
"We were getting progress in the play, but this price will have a severe impact," he said.
Given that seven billion barrels have been estimated to await recovery from the TMS via the drill bit, this is a bad day, indeed.
Among other operators, Halcon Resources has moved its rigs out.
Barrell noted in mid-January that Goodrich Petroleum still had two rigs running in the play. Even without new drills he doesn't see operators abandoning the area despite the exodus of rigs.
For now, the action is focused in part on planning and implementing fracturing operations.
A key variable as to the near future centers on the acreage that will be up for extension, according to Barrell. The companies that paid $250 to $300 (per acre) to get in will have to pay the same for a two-year extension.
"Most operators we see are paying those fees," he said. "The cards will lay down this year to see who is really committed long term."
When asked whether an upcoming TMS confab in New Orleans where he was scheduled to speak was still a go, he replied: "No better place to sulk than New Orleans."
Among the companies assuming a lower profile in the play, Comstock Resources announced recently that it had released its rig in the TMS and will postpone its drilling activity there until oil prices improve.
Greener Pastures?
The announcement revealed an unexpected twist coming on the heels of the TMS activity downturn.
Comstock stated that it would move two rigs from its Eagle Ford oil-rich shale properties to north Louisiana to begin a drilling program on its Haynesville shale natural gas properties.
This likely shocked many industry shale players.
The Haynesville play rose to prominence around 2008 and quickly became an industry darling.
Typical of the cyclic nature of this business, natural gas prices eventually cratered and gas soon became so yesterday.
The Haynesville morphed into a has-been of sorts as the players scurried to other locales to latch onto shale oil acreage, which harbored the potential to bring in the big bucks as oil prices began their ascent into the stratosphere.
According to Comstock, improved completion technology, including longer laterals, will provide strong returns on drilling projects in the Haynesville at current natural gas prices.
Remember, the industry has suffered whiplash before—and survived.