Arkoma Basin: Sooner or later, everything old becomes new again – or does it simply become LESS old?

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And, so it is with the Arkoma Woodford play in southeastern Oklahoma.  One of the earliest unconventional dry gas plays in the U.S., the Arkoma Woodford has seen its popularity with operators and investors wax and wane with fluctuations in natural gas markets.  Over the past two years, the Play has undergone a resurgence of leasing and drilling activity and also rebranded as the “Arkoma or Eastern Stack.”  Is this pure marketing hype or has something significant happened that would equate the Arkoma Stack with its supposed namesake on the other side of the state, the STACK?  First, a bit of background.

Background

The Arkoma-Woodford shale play lies within the Arkoma Basin in southeastern Oklahoma.  It’s primarily a dry gas play but features an oil and condensate window on its western extent.

Arkoma’s Woodford shale extends further into the Southern Oklahoma Basin and western Oklahoma’s Anadarko Basin.  Oil and gas production in the Arkoma region began in the 1930’s with the drilling of conventional vertical wells.  The Woodford Shale is old rock dating back to the Devonian age, nearly 400 million years ago.  Expert geoscientists characterized the Woodford formation as complexly layered and highly fractured, making it an ideal candidate for technology-driven, unconventional development of oil, gas and condensate resources.  Nearly 75 years later in 2005 Devon ushered in a new era of operations with horizontal drilling and multi-stage fracking of the basins shale formations.

During its most active period of development in the early 2000’s many leading U.S. independents such as Anterro, Cimarex, Chesapeake, Continental, Newfield, XTO (now Exxon-Mobil), and Marathon took up positions in the Arkoma-Woodford.  Successful expansions into the shallower Mayes and Caney shales drove the Arkoma Basin rig count to an all-time high of 50 in 2008.  Unfortunately, success would be short-lived.  A couple of years later, gas prices would crash, and activity diminishes almost to a standstill.  The Basin’s largest operators sold off their assets and exited the Play.  By August of 2013, the rig count, which had been in steep decline, finally bottomed out at a single rig.  For the next couple years, the count would fluctuate, occasionally surpassing a half dozen until 2015, when eight rigs were active for a good portion of the year.  Again, the short-lived increase led to another lackluster period punctuated by spikes and troughs in which the count rarely broke into double-digits. Overall, the trend was somewhat positive.

Some saw the modest increase as an improvement, but still nowhere near the glory days of 40+ rigs in the Play.  In March of this year, the rig count rose to 9 from 6 the previous month signaling a potential upswing in activity as counts have stayed between 8-10 during the first half of this year.  As of October 6, the rig count stood at 11 according to Baker Hughes and many of today’s operators in the region are heralding the arrival of an Arkoma Basin renaissance and equating the basin’s prospects with that of its western cousin, the STACK.  Could the fortunes of the rebranded Arkoma region be changing for the longer term?  Today’s leading operators in the area would like to think so.

So, what’s “new?”

 One of the most outspoken advocates of the so-called Arkoma Stack also appears to be responsible for renaming the Play.  Antioch Energy’s CEO, Nathaniel Harding, recently referred to the “Arkoma Stack” as he was comparing the similarly favorable geological characteristics of the STACK and Arkoma Basin.  His company operates just to the west of the original Arkoma Basin boundary in Hughes County, Oklahoma, drilling targets in rock it says is geologically equivalent to that found in the STACK and SCOOP.  For example, he claims the shallower, more permeable Mayes formation, overlying the Woodford, is like that found in the STACK Meramec. According to Antioch’s analysis, this oil-saturated rock is recoverable at extremely attractive economics.  But that’s not where the comparison stops between the STACK and Arkoma Stack.  If we follow Antioch’s logic, presumably resources in geologically similar rock can be exploited with the same technologies that have been successful in the STACK such as extended laterals, upsized completions, and tighter densities.  So, once again, it appears modern technology may thrust the Arkoma Stack into a new era of heightened activity with new players (and some old) leasing and developing their holdings.  Leading the pack are Antioch Energy, Corterra Energy, Silver Creek, Bravo Arkoma, Trinity Operating, as well as “old-timers” BP, who acquired legacy Chesapeake acreage, and Calyx Energy one of the Woodford’s earliest players.

Regardless of its new brand, the Arkoma Basin’s uptick in activity is reviving old problems such as constraints on takeaway capacity, resident endangered species, and, of course, volatile energy market dynamics.  Despite the recent announcement of Tall Oak’s plans to build a plant and pipeline network to handle growing gas and NGL production, is the Arkoma on trend to reinvent itself?  Will the Arkoma Stack emerge from its troubled past to stand alongside its more prolific Oklahoma kin?  We’ll be watching.

In the meantime, send me your questions or comments at jparker@tellusgeospatial.com

Sources:

Baker Hughes Rig Counts

BTU Analytics

Hart Energy

Jones Energy

Natural Gas Intelligence

Oil & Gas Financial Journal

Oil & Gas Investor

OK Geological Survey –https://groundwork.iogcc.ok.gov/sites/default/files/Woodford_Keller_v2.pdf

Organon Data

Oseberg

World Oil – Shale Energy – Developing the Woodford 2011

Julie Parker has a decade of experience serving the Energy industry where she became an expert in the integration and application of geospatial technologies to exploration and production projects and workflows. Ms. Parker entered the industry in 2006 when she became the first GIS Director for Chesapeake Energy, a large independent producer of natural gas headquartered in Oklahoma City, Oklahoma with operations throughout the U.S. During her tenure at Chesapeake, Ms. Parker built and lead a robust, cross-functional GIS department that gained a reputation for developing and deploying leading edge solutions for nearly all areas of the company.