From the storied King Ranch near the Mexican border to the 1901 Spindletop well in East Texas-- the most famous gusher of all time--oil companies are returning to their old stomping grounds in search of the next big find.
All over East Texas, producers such asAnadarko Petroleum Corp. (APC) and EOG Resources Inc. are flocking back to areas that helped fuel America’s rise as a superpower after World War II. They’re applying new techniques to layers of rock stacked like playing cards underground that oil companies have drilled for decades. And, as fields from Louisiana to North Dakotaare starting to show signs of fatigue, drillers are targeting areas that have long gone overlooked or barely tapped.
“I never thought I’d go back to East Texas,” said Mark Plummer, a third-generation oil man who grew up hearing stories about his grandfather’s days in the oil patch “living the roughneck dream.” Those fields were thought to be long-played out by the time Plummer arrived in 2000 with his own company, Chestnut Exploration & Production. The basin was “dead as a door nail,” he said. Now he’s betting his East Texas play will be his “Jed Clampett moment,” referring to the television character who struck it rich in the 1960s sitcom, The Beverly Hillbillies.
These guys are very optimistic, but it strikes me as somewhat desperate. They are hitting the oldest oil field in Texas to try to squeeze some more out. It has been working for them to a point in the Permian Basin, but I can't imagine it will be a big hit, or for long. Here's a little more:
Oil companies are racing to establish new fields capable of sustaining a drilling campaign that has upended world markets and pushed the U.S. past Saudi Arabia and Russia last year as the world’s top producer of oil and natural gas. Fueling the renewed search is a fear that shale wells are petering out too quickly, raising the stakes for a new find to replace rapidly declining production in some areas. North Dakota, one of two states at the heart of the U.S. oil renaissance, saw the sharpest output decline in the state’s history in December.
Not everyone is sure there is another big oil find out there. In 2011, former Chesapeake Energy Corp. founder Aubrey McClendon said all of the largest untapped U.S. fields have been discovered. So far, about 80 percent of the growth has come from just two areas: North Dakota’s Bakken shale and South Texas’s Eagle Ford formations.
Last year saw the slowest rate of oil production growth, at 40 percent, in those two areas since the onset of the boom. That compares to 2011 when oil production nearly doubled in the fields.
Some producers have touted Ohio’s Utica or the Tuscaloosa Marine shale in Louisiana as the fields most likely to see a flurry of development next. Others have focused instead on wringing more out of every well. As the industry moves to dispel fears of falling prices or wells that fizzle too quickly, many have begun to look to well-worn regions of East Texas.
I don't know anything about the Tuscaloosa Marine shale, and I haven't heard much about the Utica, but I'm betting they won't hold a candle to the Eagle Ford or Bakken. However, the statement about North Dakota seeing the sharpest output decline in the state's history doesn't match up with data I've seen. I'm still anticipating that the Bakken will peak soon, but the experts are saying it will be about 5-7 years out. I really get the feeling that when the shale production does peak, there are going to be a lot of people who don't understand what happened to the "new Saudi Arabia." Maybe if they knew we were picking over the carcasses of century-old fields they would understand why we can't expect this to go on forever.
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