It's 1987, late on a Friday afternoon, and Alan King, his father and his brothers are heading home from their 9 to 5 jobs.
Most people would be ready to sit and relax after a tough week.
But not the Kings. Instead, they all headed out to the Kinta Field in the north central portion of Oklahoma's Arkoma Basin to rig up a drilling site for what would be the state's first coalbed methane well.
An inauspicious start, to be sure -- but the King family began building the Bear Production Co. that day, and in the past 12 years they've helped prove that coalbed methane can be an economic resource in the heartland.
Indeed, coalbed methane research and development has been a big story for over 20 years with virtually all the focus on the western United States.
But what many folks don't know is that small "mom and pop" shops such as the King's have been quietly pioneering coalbed methane production in the Arkoma Basin in southeastern Oklahoma.
"We were all raised in Haskell County (Oklahoma), and we knew there was gas in the underground coal mines in the area," said Alan King, president of Bear Production.
"When my father was a kid, the wellheads on some old wells that were abandoned in the 1940s rusted off, and many of those wells were blowing gas -- some for 20 years," King said.
"All these indications led us to believe there was potential for producing this coal gas -- and we started this company in 1986 to specifically look for coalbed methane."
The Section 29 tax credits that were literally propping up coalbed methane activity in the Rocky Mountain region in the late 1980s played no part in Bear Production's decision to look for the unconventional gas resource in the Arkoma Basin.
"We just knew it was there," King said, "and thought we might be able to make a little money off of it."
A Pleasant Surprise
By the end of 1988 King and his family had drilled seven wells on weekends and holidays -- and all were successful. Their success, however, led to another challenge: building a gathering system to transport the gas to pipelines in the area.
"We laid the gathering lines ourselves to those first seven wells so we could actually sell the gas," King said -- and the effort was worth it.
"We were surprised by the production rates we got from those first wells," he continued. "We were expecting 20,000 to 30,000 cubic feet of gas a day from each well, but they came on for a combined 600,000 cubic feet of gas daily.
"We would have been tickled to death with 50,000 cubic feet a day from each well, so imagine our delight when each of these wells averaged about 100,000 cubic feet daily."
Even after this early success, growing the business wasn't easy.
"It's difficult to expand in this region, where most of the acreage is held for production by larger companies," King explained. "Early on in this coalbed methane play it was tough to buy a lease or negotiate a farm out, because the major companies that held the acreage didn't think it was worth their time and effort to do the paperwork.
"They didn't think they would ever draw enough off the overrides to even cover their expenses on a farm out."
By 1991 Bear Production was successful in getting a farm out from Mobil, and that summer drilled about 14 wells.
"This drilling program gave us the revenue boost we needed to really get this coalbed methane play going," he said, "and today we have over 100 coalbed methane wells in the Arkoma Basin with average daily production of around three million cubic feet of gas a day."
The company is still busy drilling and presently has 17 wells waiting on completion or hook up to the gathering system. King said Bear Production plans to drill about 30 wells a year for the next three years.
The Doors Swing Open
Bear Production's success hasn't gone completely unnoticed. Other small independent companies recognized the potential of the emerging coalbed play in the Arkoma and jumped in to claim their stake.
By last September, the Oklahoma Geological Survey reported 334 coalbed methane completions in the Arkoma Basin from Coal, Haskell, Hughes, Latimer, LeFlore, McIntosh and Pittsburg counties.
The Oklahoma coal field in eastern Oklahoma is the southern part of the western region of the Interior Coal Province of the United States. Coal rank ranges from high volatile bituminous in the western part of the Arkoma Basin to medium and low volatile bituminous in the eastern part of the basin.
About 94 percent of the coalbed methane production is from the Hartshorne coals, which are one- to -10 feet thick and dip three degrees to nearly vertical in eroded, narrow anticlines and broad synclines that trend northeastward in the basin, according to the Oklahoma Geological Survey.
The Hartshorne coals are found at depths ranging from about 600 feet to 3,700 feet, with average depth of approximately 1,300 feet. Initial production rates for coalbed methane wells in the Arkoma range from a trace to 595,000 cubic feet a day, according to a Survey report, with the average 72,000 cubic feet daily.
A Hartshorne coalbed methane field study conducted at the Spiro Southeast gas field indicated:
- Average daily gas production per well ranged from 6,000 to 127,000 cubic feet of gas per day, with an average of 50,000 cubic feet daily.
- Gas production from all 28 coalbed methane wells in the field was about 1.4 million cubic feet of gas a day.
- Cumulative gas production from September 1994 through March 1998 was approximately 1.18 billion cubic feet of gas.
- Production decline curves showed an increase in production through restimulation using freshwater and sand and servicing the water pump.
By the mid-1990s the Arkoma coal-bed methane play was getting some serious attention.
"I realized the play was heating up," King said, "and beginning in 1997 and continuing for about two years I spent all of my time and money buying up acreage.
"For the longest time we didn't have any competition," he added, "but I could see that was changing -- and I knew if I didn't build up an acreage position we could be pinched out of the play.
"Today we have room for about 100 additional wells and we are still looking at acquiring acreage," he said, "although it's getting more difficult."
Success Breeds Success
Another early entrant in the Arkoma coalbed methane play was Tulsa- based Brower Oil and Gas, which was drilling in the basin for conventional gas and had never considered coalbed methane until 1992.
"We had drilled through the coal and received gas shows, but we didn't consider it a viable producing reservoir until we started to see the success Bear Production was having," said company president Joe Brower.
"We drilled our first well strictly for coalbed methane in 1992," he said, "and that same year, when we learned the section 29 tax credits were set to expire at year-end, we decided to drill as many coalbed methane wells as possible to take advantage of the tax credits."
However, the demise of the tax credits did not dampen enthusiasm for the Arkoma Basin coalbed methane play.
"The economics are good enough to continue drilling without the tax credits," Brower said.
"But it's a small independent's game," he continued. "We can drill a well for about $50,000, so it doesn't take a huge well to make money. We typically see pay out in one to two years. But it's imperative that you keep costs down."
Brower has 27 coalbed methane wells after selling some last year. The company drills about six coalbed wells a year and coalbed methane production makes up about 25 to 20 percent of its business.
"This coalbed methane play is similar to the larger plays out west in that you have to develop an entire area to make the economics work," King commented. "You can't just drill one well here and there. You need to get a section of land and develop the entire section to spread out the costs of compression, gathering systems and other overhead.
"The more gas you can move from one area, the more economical it is."
Dry to the Bone
One major advantage of the Arkoma coalbed methane play is the absence of significant water in the coals.
Typical coalbed plays in the western United States produce large amounts of water, which require costly disposal plans, and wells must go through a de-watering phase before significant gas production begins.
The initial produced water from the Arkoma coals range from zero to 174 barrels of water per day with an average of just 10, according to the Oklahoma Geological Survey. Most of the Arkoma coalbed methane wells are drilled on the flanks of anticlines and have relatively little produced water.
"De-watering hasn't been too much of an issue for us," King said. "Most of my wells produce dry gas with no water. However, in the last few years we have ventured off the anticlines into wetter coals."
When you get water, you get a real problem.
"It's difficult to get a water disposal well drilled, because all the zones in the region that are porous enough to take water have gas in them," he said. "Water disposal costs can be $1.50 per barrel."
The coalbed methane wells typically enjoy a long life, which also helps make the play economic.
"Some of the original wells I put on line in 1988 are still making 30,000 cubic feet of gas a day," King said. "We've learned a lot over the years about the best way to complete these wells, so I expect more recent wells to produce even longer."
The numbers prove the economics of this play to small operators:
- King said Bear Production has recovered about two billion cubic feet of gas from one section in Haskell County, and it's still producing.
- Brower said his firm is seeing in excess of a quarter of a billion cubic feet of gas per 160 acres.
Companies active in the Arkoma coalbed methane play continue to investigate different drilling and completion techniques to enhance production. Brower said completion methods have evolved from 4,500-barrel fracs with 50,000 to 60,000 pounds of sand, to nitrogen, to CO2, to water fracs.
"Everything has been tried," Brower said, "and every company has to determine what works best for them. As a general rule we use a straight nitrogen breakdown frac with no sand, no water, and no acid."
In recent years companies have tried horizontal drilling in the coals -- with mixed results.
"We drilled five horizontal wells last summer, but we have determined it is not economically feasible for us at this time," King said. "Horizontal wells are quite expensive and we were testing to see if we could replace three vertical wells with one horizontal well, but that didn't work out."
Brower Oil and Gas also has drilled one horizontal well in LeFlore County that went out 855 feet, but that well, too, has had mixed results.
"We tested over 230,000 cubic feet of gas a day," Brower said, "but have never gotten back up to that rate since putting the well on line. The horizontal well has produced water, which is an economic concern, and we've experienced some problems with the hole caving in.
"The verdict is still out for us."
Brower's drilling and completion costs are about $275,000 for a horizontal well versus $40,000 to $50,000 for a vertical well -- meaning he can "drill several vertical wells for the cost of one horizontal well, with a great deal less risk."
However, some companies are banking on horizontal technology. Tulsa-based Mannix is drilling exclusively horizontal wells in the play and, along with service industry partners, are perfecting a system that works for them.
According to the Oklahoma Geological Survey, 12 horizontal wells had been drilled by four operators in the Arkoma coals by last September in Haskell, LeFlore and Pittsburg counties. Initial production rates ranged from 80,000 to 595,000 cubic feet of gas daily.
"As coalbed methane plays heat up all over the country, we will see another big jump in activity in this region," Brower said. "Coalbed methane activity is becoming basin-wide in the Arkoma as more and more people get into it and find the coals productive in new areas.
"We are even hearing some indications that larger independents are looking to stake a claim in our backyard," he added.
"The success here in the Arkoma has companies looking throughout the Mid-Continent for coalbed methane production."