Woodford Shale and Cana-Woodford: High bcfe wells with attractive economics

The first commercial oil well from the Woodford Shale in Oklahoma was drilled in 1939. Since then, more than four million barrels of oil have been extracted from the formation.

Today, the Woodford is better known as a shale gas play. However, it may again emerge as an oil play, according to some geologists who believe the thermal maturity of the formation in parts of the Ardmore Basin puts the Woodford right in the middle of the oil window.

Located mainly in southeastern Oklahoma in the Arkoma Basin, the Woodford Shale has seen drilling as far south as Marshall County in the Ardmore Basin. A few companies have also been drilling in south-central Oklahoma on the flanks of the Arbuckle Uplift. The Woodford Shale is also being drilled in the Trans-Pecos region of West Texas and in a small sliver of southeastern New Mexico.

The nearby Cana-Woodford in western Oklahoma has an abundance of oil and natural gas liquids. It is starting to be heavily drilled due to the relatively high prices for oil and gas liquids compared to dry natural gas. Two Oklahoma City-based companies, Devon Energy and Chesapeake Energy, are the major players in the Cana-Woodford.

The Woodford started as a vertical play, but horizontal drilling techniques and multi-stage fracturing technology used in the Barnett Shale in Texas have been used in the Woodford in recent years with much success. Last year, Newfield Exploration found some interesting results after drilling in the Arkoma Woodford west of Hughes and Coal countries. There are oil and gas windows beginning to form based on the Newfield data.

The Woodford shale rock is silica-rich. It is very brittle and generates lots of natural fractures. It also behaves very well when modern fracturing techniques are applied. The shale is typically found at depths ranging from 7,500 to 8,500 feet and is generally anywhere from 50 to 300 feet thick.

At present, there are about 25 to 30 companies operating in the Woodford Shale. Some of the larger operators include Devon Energy, Newfield Exploration, Chesapeake Energy, Marathon Oil, Range Resources, Continental Resources, SM Energy, Cimarex Energy, Antero Resources, Petroquest Energy, and Southwestern Energy. Houston-based Southwestern has long been the dominant producer in the nearby Fayetteville Shale in Arkansas.

In an important development for Woodford producers, Tulsa-based ONEOK Partners said May 2 that it will invest between $1 billion and $1.2 billion between now and late 2013 to construct a new 570-mile, 16-inch NGL pipeline – the Sterling III Pipeline – to transport unfractionated NGLs from the Mid-Continent region to the Texas Gulf Coast. The midstream company will also reconfigure its existing Sterling I and II NGL distribution pipelines to transport NGLs, and it will build a new 75,000-barrel-per-day NGL fractionators at Mont Belvieu, Texas.

"These projects will accommodate the growing NGL supplies in the Mid-Continent and elsewhere and help alleviate the infrastructure constraints between the Mid-Continent and Gulf Coast markets, while meeting the requirements of natural gas processors and NGL customers," said Terry Spencer, COO of ONEOK.

Although the Sterling III Pipeline will start in Kansas, it runs through Oklahoma on the way to the Gulf Coast and will be available to transport either unfractionated NGLs or NGL purity products originating in the Woodford Shale, the Cana-Woodford Shale, and the Granite Wash, which is located in the Texas panhandle and western Oklahoma.

The new fractionator in Texas will cost between $300 million to $400 million to construct and will augment ONEOK's 80%-owned existing 160,000-bpd fractionator, also in Mont Belvieu. The 75,000 bpd capacity of the new fractionator can be expanded to 125,000 bpd to accommodate additional NGL volumes as they are added to the pipelines.

Last fall, Antero Resources sold its midstream assets in the Arkoma Woodford to affiliates of Cardinal Midstream LLC for $268 million in cash. This included its 60% membership interest in Centrahoma Processing, which was a joint venture with MarkWest Energy Partners that operates two cryogenic processing plants in the Arkoma Basin. In addition, Cardinal acquired about 50 miles of gathering pipeline in Antero's Northern Front and East Rockpile areas of the Woodford Shale and its amine treating plant for CO2 removal located in the East Rockpile area. OGFJ

More Oil & Gas Financial Journal Current Issue Articles
More Oil & Gas Financial Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com

Related Articles

Tennessee Gas Pipeline has successful open season

04/14/2014 Kinder Morgan Energy Partners LP reports that KMP’s Tennessee Gas Pipeline Co. (TGP) has awarded Antero Resources 100% of the capacity offered in TGP’s binding open season for its proposed Broad Ru...

Changes in longitudes: Part 1 — ethane exports to Europe

03/30/2014 The large and growing surplus of US ethane is leading producers and shippers to step up efforts to export ethane to Europe and eventually to Asia. But there are several hurdles, including the need ...

Kinder Morgan to invest $1B to expand CO2 network

03/26/2014 Kinder Morgan Energy Partners LP will build and operate a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide from the company’s St. Johns source field in Apache County, Ariz., to ...

Pipeline Week: PennWell's Oil & Gas Pipeline Conference Exhibition, PODS Users Conference to co-locate

03/25/2014 PennWell and the Pipeline Open Data Standard Association have agreed to co-locate the 23rd Annual GITA Oil & Gas Pipeline Conference & Exhibition and the 10th Annual PODS Users Conference. ...

The Dakota Access Bakken Crude Gateway to the Gulf

03/20/2014 No sooner had we finished up our analysis of the divergent fates of two North Dakota crude oil pipeline projects - the Enbridge Sandpiper (going ahead after a successful second open season) and the...

More Oil & Gas Financial Articles

Tennessee Gas Pipeline has successful open season

Mon, Apr 14, 2014

Kinder Morgan Energy Partners LP reports that KMP’s Tennessee Gas Pipeline Co. (TGP) has awarded Antero Resources 100% of the capacity offered in TGP’s binding open season for its proposed Broad Run Flexibility and Broad Run Expansion projects.

Changes in longitudes: Part 1 — ethane exports to Europe

Sun, Mar 30, 2014

The large and growing surplus of US ethane is leading producers and shippers to step up efforts to export ethane to Europe and eventually to Asia. But there are several hurdles, including the need to construct specialized dock and loading facilities, special ships required to move ethane in overseas trade, unloading and storage facilities at the receiving end, and the need for ethylene crackers in the global market —most of which now use naphtha as their feedstock—to make costly modifications before they can switch to ethane.

Kinder Morgan to invest $1B to expand CO2 network

Wed, Mar 26, 2014

Kinder Morgan Energy Partners LP will build and operate a new, 213-mile, 16-inch diameter pipeline to transport carbon dioxide from the company’s St. Johns source field in Apache County, Ariz., to the Kinder Morgan-operated Cortez Pipeline in Torrance County, NM.

Pipeline Week: PennWell's Oil & Gas Pipeline Conference Exhibition, PODS Users Conference to co-locate

Tue, Mar 25, 2014

PennWell and the Pipeline Open Data Standard Association have agreed to co-locate the 23rd Annual GITA Oil & Gas Pipeline Conference & Exhibition and the 10th Annual PODS Users Conference. The partnership will result in the creation of Pipeline Week to be held October 28-30, 2014.

The Dakota Access Bakken Crude Gateway to the Gulf

Thu, Mar 20, 2014

No sooner had we finished up our analysis of the divergent fates of two North Dakota crude oil pipeline projects - the Enbridge Sandpiper (going ahead after a successful second open season) and the Koch Dakota Express (cancelled in January) – then we learned that competitor Energy Transfer Partners (ETP) had launched a binding open season for a third pipeline proposal following basically the same route.

Most Popular

Oil & Gas Jobs

Search More Job Listings >>
Subscribe to OGFJ