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Vol. 231 No. 7 |
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| NELL L. BENTON, ASSOCIATE EDITOR |
Unlocking the mystery of a 30-year-old well
There is no doubt that Mike Newport has a passion for land and the resources that come from it. After starting his career with Amoco, Newport spent 30 years working in a variety of land management positions. In 2008, he launched Mainland Resources and joined the hunt for profitable resources in the US shale plays.
Newport quickly learned that timing in the shale business can be your best friend or your worst enemy. “We had the goal to lease 10,000 acres in the Hosston/Cotton Valley,” he said. “We successfully leased 2,500 acres at about $200/acre. Then, literally, the Haynesville play erupted overnight. We thought we had a deal at 2 p.m. on Friday at $300/acre for 1,500 acres. Well, over the weekend, they did a deal for $2,000/acre. They didn’t even get back to us and give us a chance.” Newport ended up securing 2,700 acres in total and went to work developing his smaller-than-hoped-for, but potentially lucrative, land.
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Mike Newport, president of Mainland Resources, at the company’s Dehan well in Louisiana.
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After joining forces with Petrohawk and finding success with several wells, Mainland strategically entered into the game of debts and profits. A bridge loan, a $40 million credit agreement and a series of successfully drilled wells, including one of the top 10 biggest producers in the Haynesville at the time, brought Newport to exactly where he wanted to be—revisiting a mystery from three decades earlier.
Back in 1981, when Newport was working for Amoco in New Orleans, Chevron drilled a well in the Buena Vista prospect in Mississippi targeting the Smackover Formation. Chevron engineer Jack Cox managed the project. The team expected to find the Smackover Formation around 19,400 ft and expected 200–300 ft of shale before the Smackover. They instead encountered extremely high pressures of 22,000 psi at 19,400 ft. Typical North Louisiana Haynesville Shale wells encounter about 8,000 psi. They had to go to 19-lb/gal
mud and drilled the next 2,500 ft of shale section as a controlled blowout. They never found the Smackover and had to plug and abandon the well because of a potential blowout due to casing problems uphole.
Though Newport had just begun his career, he became fascinated with the story of the Buena Vista mystery well: “At the time, several majors were drilling these deep structures looking for the elephant, the big reserves. I heard about them because you didn’t see a lot of 22,000-ft wells. It took them two years to get down that far.”
In 2009, Mainland acquired 8,500 acres in the Buena Vista project and additional leasing with the target of 20,000 gross acres. American Exploration secured 5,000 acres in the area as well, and the two companies made a deal to pool their interests in the area. While a strategic business decision (the land cost about $400/acre), acquiring this lease was also of great personal significance to Newport.
In April 2010, Mainland closed the sale of 40% of its Haynesville rights at East Holly Field for $28.8 million to Exco. “We started with an initial investment of $800,000 and sold our assets for $28 million. This enabled us to become debt-free and put together this new, bigger project [Buena Vista],” said Newport.
Newport immediately went to work assembling his dream team, which included original members of the 1981 project team. Jack Cox contacted Newport and asked to be involved. Cox, who founded Anderson Oil Company in 1981, had amassed over 28 years of drilling and production experience.
In a rare stroke of luck, a contact of Newport’s found the original drill cuttings from the well in 1981 and sent them to be analyzed. Charlie Morrison, a geophysicist out of Jackson, Miss., was brought on board for the new interpretations. Simeon Horton, who worked with Newport on the Hosston/Cotton Valley deal, became Mainland’s staff geologist and a member of its board of directors.
The analysis of the 1981 drill cuttings and reprocessed seismic data solved the mystery of the Buena Vista well. The seismic data revealed a significant “turtle” feature in the formation, a structure about which little was known in 1981. Turtle formations, which form when the withdrawal area between two salt domes becomes a low and begins to fill with sediment, are characterized by tension faults and natural fractures. The low area (rim syncline) shifts to a position alongside the diapirs as the salt continues to rise. As the diapirs grow and the new rim synclines deepen, the original low between the diapirs becomes domed upward.
Because of advanced scientific understanding of turtle domes, the Buena Vista project team was able to identify organic-rich source rock. The results of a recent gas shale analysis done by Schlumberger—and the extremely high pressures encountered in the original well—indicate significant resource potential at the prospect. The team has decided to drill a vertical well with a three- to five-stage frac job.
With the July date to spud the well approaching, Newport is visibly excited, both by the idea of finally solving the 30-year-old mystery and by the opportunities that this project brings. Mainland approached American Exploration, its partner in the Buena Vista acreage deal, about doing a merger, which is expected to be approved this fall.
Few people get the momentous chance to revisit a time and place in history like those involved in the Buena Vista project. For Newport, it is more than a chance to travel back in time. It is a reminder of the tremendous opportunities that are yet to be discovered. 
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