Friday, April 5, 2013

Small Company Ready To Drill Into The Illinois Basin, Illinois -- April 5, 2013

A reader alerted me to a small oil company about to drill its first well in the Illinois Basin, Illinois, as reported by Rigzone:
Strata‐X Energy Ltd. provided an update on the Company's Vail Oil Project in the Illinois Basin, Illinois (USA) where Strata‐X currently has a 100 percent interest in 46,300 net acres. The Vail Oil Project is a high potential oil appraisal and development project with the first appraisal well due to commence in the second quarter of 2013.
Data points:
  • vertical depth: 4,500 feet
  • horizontal leg (short): 4,300 feet
  • total depth: 9,300 feet
From the press release:
The Company's working interests are situated within an area interpreted as an unconventional continuous oil field in the Illinois Basin. Strata‐X plans to continue leasing additional prospective lands prior to and during the Vail Oil Project appraisal drilling program. Given the competitive leasing environment in the area, the Company will not release the location of its first horizontal well until after the permit to drill has been issued by the proper regulatory agencies.
From another Strata-X press release, March 17, 2013:
Strata‐X recognizes direct analogies between the Elm Coulee Oil Field, located in the Williston Basin, and the Vail Oil Project. According to the Montana Board of Oil & Gas Conservation website, Elm Coulee has produced over 138 million barrels of oil equivalent to date from a continuous, unconventional oil field from the Bakken dolomitic reservoir and is expected to ultimately produce over 200 million barrels of oil (Sonnenberg and Pramudito, 2009). The dolomitic reservoirs in both Vail and Elm Coulee are of the same geological age, have similar thickness and are immediately below highly generative source rocks.
Elm Coulee has about 5 million barrels of oil in place per section (Walker, et al., 2006), which compares favorably to Vail''s interpreted 3 million barrels of oil in place per section at shallower depths. Strata‐X interprets that the target 50,000 net acres at the Vail Oil Project contain over 230 million (undiscovered) barrels original oil in place. (see Cautionary Statement below).
Oil was intersected in many historic wells at Elm Coulee but, like Vail, oil flows and recoveries were sub‐commercial in the early vertical wells. More recent horizontal hydraulic fracturing treatments at Elm Coulee have resulted in commercial oil flows with July 2012 production from the field in excess of 33,000 barrels of oil equivalent per day (Montana Board of Oil & Gas Conservation website, accessed 9/19/12).
Back of envelope calculations:
Currently, if operators are recovering about 4% from OOIP in the Bakken, North Dakota side of the state line; if they are putting in two wells/section with EURs of 400,000 each:  at 4% recovery and 800,000 bbls EUR / section / primary recovery, that works out to 20 million bbls/section/OOIP vs the press release number of Elm Coulee's 5 million barrels of OOIP.
For newbies:
  • 4% is on the low side. Operators think they are recovering as much as 8% from the Bakken, on the North Dakota side of the state line
  • two wells per section is very much on the low side; the best Bakken is nearing six wells per section; most Bakken at four wells per section; and all Bakken a minimum of two wells per section
  • EURs of 400,000 is very conservative; the best Bakken is now being estimated at 1 million bbls EUR. the lower end EUR is about 300,000 bbls EUR but I don't see the 300,000 bbl-EUR bandied about much
If one moves the needle to 6%, 600,000-bbl EURs, and four wells per section, one gets in the neighborhood of 40 million bbls/section/OOIP in the Bakken on the North Dakota side of the border.
But don't take my word for it. This is from Legacy Oil talking about the Spearfish:
"In terms of resource potential, the regional extent of the Spearfish is still being delineated, however, in areas already shown to be prospective, reservoir parameters can suggest potential OOIP to be in the realm of 9.0 to 15.0 million barrels per section, which could represent 2-3 times what the southeastern Saskatchewan Bakken offers on average."
That's the Spearfish, and the Bakken is known to be a whole lot better.

From another post, but this time from the Bakken on the North Dakota side of the border:
Is there 4.4 million barrels of recoverable oil in each section? It appears to be the industry consensus that using current technology only 1 - 3% of total Bakken oil is recoverable; there are suggestions that EOG is extracting 6 - 9% of the recoverable oil. Let's say, EOG is recovering an unheard-of 10% of the total oil. Remember, EOG opines EUR of 700,000 barrels per well. Currently, EOG generally drills one well in each section in the Parshall. 700,000 is 10% of 7 million barrels. [And, if EOG is only extracting 3% of the total oil reserves, then there would be 23 million barrels oil where EOG drills a well.]
You can do the math, substituting your own numbers, 2, 3, 4, 6, or 8% primary recovery and divide it into 4 million bbls/recoverable oil/section from the best Bakken to get an idea of OOIP.

Enough of this. Time to move on.

Disclaimer: I am well known to make simple arithmetic errors. The above was done on the run with intermittent wi-fi connectivity. The post could be updated later to correct typographical or arithmetic errors. 

2 comments:

  1. Continental Resources ( CLR ) owned some acreage in this Basin, but sold it approx. one year ago.. At the sales time , CLR sold All the acreage it owned East of the Mississippi River , In Michigan and in the Marcellus..

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    1. I remember that now that you mentioned it. I remember posting that. I just find it interesting to compare these other basins with the Williston Basin. There's a reason the Bakken is still the "gold standard."

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