A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

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According to a report by the Basin Research Institute, Louisiana State University, preliminary evaluations estimate a potential reserve of about 7 billion barrels of oil in the Tuscaloosa Marine Shale.  The TMS follows the Cretaceous shoreline of the gulf coast and represents the lowest formation of the Gulf Cretaceous series.  The Tuscaloosa Group is made up of three units.  The lowest member is transgressive deposition consisting of argillaceous sands (Stringer).  The inundated marine shale comprises the middle unit and consists of black to gray, fissile shale.  The regressive upper unit is comprised of sands and shales closely resembling the upper Eutaw (Eagle Ford).  The entire Tuscaloosa Group is over 1,000 feet thick.  The middle marine shale interval varies in thickness from about 500 feet in southwestern Mississippi to 800 feet in southeastern Louisiana, depending on the underlying structural features.   The primary producing area lies at a depth of about 10,000 feet.  Permeability ranges from less than 0.1 to 0.06 md.  Porosity varies from 2.3% to 8.0%.

Below are some maps and cross sections to get a better idea of the geology of the TMS.

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

As far as operator activity goes, the main operators targeting the Tuscaloosa Marine Shale are Devon Energy, Goodrich Petroleum, Encana Corp., Indigo Minerals, and EOG Resources.

Encana holds the largest lease position with roughly 355,000 net acres and 1,250 net well locations.  The company is utilizing a 2 rig program and has drilled and completed 5 wells in the play with plans for 7 additional wells this year.  The strategy for Encana in the TMS will be to establish commerciality through resource play hub efficiency, completions optimization, longer laterals, and a potential liquids joint venture opportunity.  Encana entered the TMS in a farm-in agreement with Denbury Resources.

Devon Energy has 190,000 net acres where they plan to drill/participate in 10 wells this year.  The companies’ latest well, drilled in St. Helena Parish, produced 384 bod in its initial test period.  Estimated EURs for the company range from 400-600 MBOE.  The TMS is one of 5 emerging plays included in the $2.5 billion joint venture between Sinopec and Devon.

Goodrich Petroleum has acquired 120,000 net acres at an average price of $225/acre.  Goodrich is participating with Encana for a 25% working interest in the Joe Jackson 4H-2 well in Amite Co. Mississippi.  The company also participated in the completion of the Encana Anderson 17H-1 with a 5% working interest with a 72 hour production rate of 975 Bopd and 425 Mcf/d on a 15/64 choke and 2,119 psi flowing casing pressure.  The well has a 7,365 foot lateral with 30 frac stages.

EOG Resources has about 120,000 net acres prospective to the TMS.  The company is still in the acreage acquisition phase with positions in both in the higher resistivity area and outside as well.  This could be a possible indication that EOG is targeting structural factures and not relying so much on resistivity.  EOG has signed a joint venture with a division of Mitsubishi for a stake in EOG’s development of the play.

Using Drilling Info, I’ve highlighted some permit and production activity on the maps shown below.

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

A Geological and Developmental Run Down of the Tuscaloosa Marine Shale

Completed well costs are still in the high range running from $9-$11MM with the play still being economically unproven.  Still, initial potentials are encouraging and along with light Louisiana sweet crude pricing at around $15/bbl over WTI, and low royalties around 20%, the TMS is attractive.  Quarterly corporate earnings and results are beginning to be released, so it will be interesting to get some further insight into operational plans in the TMS.  Stay connected to the DI Emerging Plays URB for more highlights on this and other emerging plays.

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