Drilling activity in the oil-rich Tuscaloosa Marine Shale is accelerating and the formation’s development will benefit the economies of Baton Rouge and New Orleans, Goodrich Petroleum Corp. President Robert Turnham Jr. said Tuesday.
Turnham made comparisons of Goodrich’s early experience with wells in the Tuscaloosa shale to the Bakken Shale in South Dakota and the Eagle Ford Shale in Texas, which have generated oil and gas industry jobs and triggered economic surges.
“You can’t find workers in the Bakken …. You have truck drivers in the Eagle Ford making close to $100,000” a year, Turnham said.
Turnham was one of the keynote speakers at the Tuscaloosa Marine Shale Summit in Baton Rouge. The summit’s opening sessions drew about 200 people.
The Tuscaloosa stretches through the center of Louisiana into Mississippi. In 1997, LSU’s Louisiana Geological Survey Office estimated the formation could produce 7 billion barrels of oil.
But Kirk Barrell, president of Amelia Resources LLC and a speaker at the summit, said the data gathered during the past few years show the total may be around 9 billion barrels.
Goodrich Petroleum has leased more than 300,000 acres in the oil-rich formation. Earlier this year, the company said it would spend $300 million drilling the Tuscaloosa in 2014 and expected to have five rigs working in the formation by the end of next year.
Turnham said that the more experience drillers gain in the Tuscaloosa the more efficient they become.
He said Goodrich doesn’t want to be arrogant by saying it’s cracked the code to drilling in the Tuscaloosa, but the company is getting closer.
The company’s Crosby well, the most productive drilled so far in the TMS, produced 140,000 barrels in 8½ months. It takes around 10 months on average for a well in the Bakken to produce 100,000 barrels of oil and about 12 months in the Eagle Ford. The Crosby well reached that point in about half the time.
Goodrich expects its wells will produce 600,000 to 800,000 barrels of oil over a 40-year production life, Turnham said. The company thinks the economics of the Tuscaloosa wells, although more expensive to drill, will compare favorably with those in the Eagle Ford.
That’s because the Tuscaloosa has a number of advantages over other formations, including:
- Almost all of the wells’ production, 92 percent to 96 percent, is oil. In the Bakken and Eagle Ford, oil accounts for 87 percent and 85 percent of production, respectively.
- Lower royalty rates. Goodrich is paying an average of 18.5 percent versus 25 percent in the Eagle Ford.
- Lower severance taxes in Louisiana and Mississippi.
- The wells produce a higher-quality crude that fetches a higher price.
- Low transportation costs. Goodrich is paying around $2 per barrel to truck the oil to refiners.
Tim Fisher, co-founder of Tuscaloosa Energy Services and one of the summit’s organizers, said the Tuscaloosa Marine Shale has another major advantage: a plentiful supply of water.
Hundreds of thousands of gallons are needed in fracturing the formation to release the oil, and the shortage of water has been an issue in other formations.
The scarcity of water in west Texas will lead to “water wars” similar to those being fought in parts of Colorado, Fisher said.