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	Vol. 229 No. 10
ARTHUR BERMAN, CONTRIBUTING EDITOR, bermanae@gmail.com

Geology matters in the Austin Chalk play

I have been critical of resource plays in this column, but not because I dislike the plays. What bothers me about resource plays is that many operators fail to use basic geology to improve their performance. The Austin Chalk play in two areas of the onshore Texas Gulf Coast is an example of an unconventional play in which geology and trap definition matter, and can be used to drill wells with better rates and reserves.

The Austin Chalk was deposited across much of the Cretaceous Interior Seaway during the Coniacian and Santonian stages, from 89 to 84 Ma. It consists of chalk, marl, shale and volcanic ash beds, and is about 500-600 ft thick. The upper part of the interval is a pure chalk that is highly fractured but is not always charged with oil and gas. The lower part consists of organic-rich marls with high log resistivities that are charged in most areas of onshore Texas. The marls represent deeper-water deposits than the upper chalk, and are lithologically similar to the underlying Eagle Ford Shale. The Eagle Ford Shale is the source for both the Austin Chalk and underlying Woodbine Sandstone, though the Austin Chalk may be partly self-sourcing.

Unlike most carbonate rocks, chalk does not react with groundwater, and porosity reduction is caused by burial compaction rather than by chemical diagenesis. Porosities in the Austin Chalk are commonly quite low compared with other chalks around the world, but reach 8-11% locally in the organic-rich marls that have high thermal maturity. In this case, secondary porosity is created by decomposition of organic matter and conversion to gas.

The first commercial discovery in the Austin Chalk was made in 1923 at Luling Field, and Pearsall Field in South Texas was discovered in 1935, but the largest Austin Chalk Field is Giddings. It was discovered in 1960 and has produced 501 million bbl of oil and 4.3 Tcf of gas (7.3 Tcfe) from an average depth of 9,000 ft. Giddings is the second largest field and the largest single pool in the onshore Texas Gulf Coast (Katy Field is larger overall with 7.1 Tcfe produced from the Yegua and 2.5 Tcfe from the Wilcox). Brookeland Field was discovered in 1991, and is the only major Austin Chalk field in which most wells were horizontally drilled. Brookeland has produced 405 Bcf and 35 million bbl of condensate from an average depth of 12,000 ft. The average per-well cumulative production at Brookeland Field is 1.5 Bcfe, 1.1 Bcfe at Giddings, 0.8 Bcfe at Luling and 0.5 Bcfe at Pearsall.

The Austin Chalk play has a mixed reputation in the industry because the average cumulative production of the nearly 15,000 Austin Chalk completions in the Texas Gulf Coast is less than 1 Bcfe per well. All fields were initially drilled on structural highs but, because the Austin Chalk is a continuous accumulation, operators apparently lost sight of this, and drilled wells on a grid with little attention to geology. In short, the Austin Chalk was viewed and developed as a resource play. Despite its generally low per-well production, it still compares well with rates and reserves for other resource plays. For example, the average per-well cumulative production in the Barnett Shale at Newark East Field is less than 0.5 Bcfe.

Much of the drilling occurred when oil and gas prices were low in the 1990s, and many wells were, therefore, marginally commercial but would be profitable at today’s prices. The Austin Chalk is naturally fractured, and fracture stimulation is not commonly used in completion, although it is reasonable to ask why not.

Two important exceptions to the marginal results in the chalk are the downdip part of Giddings Field in Washington and Grimes counties, and Brookeland Field in Newton, Jasper, Tyler and Polk counties. As development at Giddings matured, EURs decreased from an average of 3 Bcfe/well in 1980 to less than 0.5 Bcfe in 1989. When operators began drilling horizontal wells in 1991, recoveries improved to 2-3 Bcfe.

The downdip portion of Giddings Field was discovered in 1991, and average recoveries there were 3-5 Bcfe. All earlier wells at Giddings were updip from the Cretaceous (Sligo) reef margin that underlies the Austin Chalk. Throughout the Texas Gulf Coast, downdip plays (e.g., Wilcox, Vicksburg, Frio and Yegua) have higher production rates and thicker, higher-quality reservoirs than updip plays, and traps are generally structural. The Austin Chalk is no exception. There are 33 wells in the downdip Giddings Field that have each produced more than 10 Bcfe from wells with average horizontal lengths of 3,500 ft. Seven of these wells have produced more than 20 Bcfe, and two produced more than 30 Bcfe.

In Brookeland Field in East Texas, most of the 400 wells were drilled horizontally. Per-well EURs averaged 2 Bcfe through the 1990s but have increased to 3.0 Bcfe today, because wells have been drilled on structural highs. The economics of off-structure wells are limited by high water production. Twenty-five wells recently drilled on structural highs will produce more than 5 Bcfe/well, and six of these will recover more than 10 Bcfe; eight of these wells produced more than 300 MMcfe each in their first month.

While all Brookeland wells drilled to date are located updip from the underlying Cretaceous shelf margin, several locations in Tyler County have been permitted recently to test the downdip potential of the Austin Chalk. Wells are typically completed with dual laterals whose average length is 4,700 ft. Trap definition through seismic mapping has been an important factor in the improvement of well performance at Brookeland Field.

I evaluated 28 wells drilled in structurally favorable locations in Brookeland during the last 5 years. Twenty-seven were profitable at NPV10 with an average EUR of 5 Bcfe; one was a mechanical failure. The economic threshold at these rates was 1.5 Bcfe. The average per-well profit, net of investment, was more than $17 million using $70/bbl oil and $6.50/MMcf gas prices.

High rates and reserves, and the resulting rapid payout, along with reasonable acreage costs, make this play as attractive as any that I have evaluated in several years in the onshore Texas Gulf Coast. Compared to other unconventional plays, the Austin Chalk has similar low resource and reservoir risk, but lower commercial risk. Unlike many shale players, Austin Chalk operators have effectively applied petroleum geology to manage risk at Giddings and Brookeland.