Fast-growing Barnett Shale reservoir a template for fields nationwide.
Steve Quinn - AP - April 7, 2006
PONDER, Texas - From atop a 40-foot-high walkway on a towering natural gas rig, Doug Hampton scans the grassy scrubland that has served ranchers since the 19th century.
He doesn’t see much evidence of that history now, though. No cattle, horses or cowboys. Instead, out on the horizon, he sees the future of this vast expanse north of Fort Worth.
“Just look out there. See?” he said, pointing to another solitary steel structure. “There’s a rig over there, another out there and another way out there.”
Hampton is a project manager for Oklahoma City-based Devon Energy Corp., one of several companies tapping into the nation’s fastest-growing natural gas field - The Barnett Shale.
The reservoir is vital to a tight U.S. supply market, has become a template for other fields nationwide, and is turning oil and gas into this region’s most important industry.
The changing landscape is making wells on high schools and private property a familiar sight. Even Dallas/Fort Worth International Airport is reviewing its options with 12 companies to lease land for drilling.
“It’s going great guns,” said John Wood, director of reserves and production for the U.S. Department of Energy’s information administration, which ranks the shale as the fourth-most productive onshore field in the nation.
Barnett Shale produces about 1.2 billion cubic feet of natural gas a day, enough to power about 10,500 homes a year. Forecasts say that will eventually reach 1.7 billion cubic feet, or 2 percent of the annual domestic production.
That growth is crucial because most gas drilling operations - which make up the vast majority of the U.S. supply - are declining or stagnating. The United States produces 85 percent of its gas supply.
“If we did not have shale gas, then there would be less gas available and natural gas prices would be higher,” said Kent Bowker, a private Houston-based consultant who once worked for an energy company at the forefront of the Barnett Shale work. “I didn’t think it would be nearly as big as it is right now.”
Technology helps drive growth
Named after pioneer settler John W. Barnett, the 5,000-square-mile reservoir covers 15 North Texas counties. It consists of a dense, jet black rock found thousands of feet below the surface.
Gas was first discovered there in 1981, but geologists were frustrated for years because tight geographic formations made it tough to unlock gas from the heavy rock.
The Barnett Shale wasn’t even among the nation’s top 100 natural gas fields until the last few years when two technological advances helped drive growth: horizontal drilling and a hydraulic fracturing technique to break through the thick rock surrounding the gas.
That means Barnett Shale has gone from 25 rigs drilling wells in 2001 to more than 130 by the end of last year. In production, the gas field trails only the San Juan Basin Gas Area, which covers New Mexico and Colorado; Prudhoe Bay in Alaska; and Pinedale in Wyoming.
analysts and executives credit George Mitchell, who sold his Houston-based Mitchell Energy to Devon in 2002 for $3.5 billion, for not giving up on the North Texas field.
“It’s taken a lot of effort to unlock the heat,” said George Jackson, former Mitchell employee, now an operations supervisor with Devon. “He had to drag most of us with our heels fixed to the dirt, but he understood what its value was and that it would work.”
George Mitchell said he believed Barnett Shale could be profitable despite the geologic barriers. He said engineers and geologists repeatedly told him to cut his losses and forget about the field and move on.
“If we hadn’t persisted, we never would have made it work,” Mitchell said. “I had to kick their butts to get it done and now, it’s a tremendous asset to the entire country.”
In 1997, Mitchell’s engineers found that blasting water and sand into the shale would crack the tight rock and economically produce the natural gas. Five years later, just as he was selling his business to Devon, his crew found a way to reach larger tracts of shale using horizontal drilling.
By drilling straight down and then across, companies can extract large amounts of gas from one well rather than four or five.
In the case of Hampton’s project for Devon, the crew drilled about 8,000 feet down then continued boring another 2,000 feet across the shale.
“It’s the geological complications that make this unique,” said Devon Vice President Brad Foster, whose company leases or owns more than 500,000 acres and accounts for about 45 percent of the area’s production. “It’s not as easy as putting a drill bit down into the ground; you have to understand where you are before you drill.”
Horizontal drilling allows producers to reach gas beneath churches, playgrounds and residential developments with minimal surface disruption. In one case, gas is being extracted from beneath an elementary school in Denton, Texas, but no drilling takes place on the land.
This kind of production has helped small and developing communities build their tax base, but it hasn’t created a rush on land, says Terry L. Clower, economist with the University of North Texas in Denton.
That’s because property owners may be willing to sell their house or business, but not the mineral rights that come with it.
“It’s been a huge driver in improving amenities in a region with pockets of it already doing very, very well,” Clower said. “And for some of the areas that have not seen as much growth, they have benefited greatly as well.”
The technology working in Texas is being applied to other areas where shale is found, including Arkansas, Oklahoma, Michigan and several Canadian provinces.
Instrumental to U.S. gas supply
Analysts say such drilling could be instrumental to the nation’s natural gas supply as other areas dry up.
“That is the only segment that is going to give us a chance to continue growing,” said Bob Esser, a senior consultant with the Cambridge Energy Research Associates.
“There may not be another Barnett Shale that is as productive, but we think there are other shales that will be productive,” said Glenn Darden, chief executive of Fort Worth, Texas-based natural gas and crude oil producer Quicksilver Resources.
Darden said Quicksilver has successfully started branching outside of Texas and is pursuing similar projects throughout North America.
“Just about every oil and gas company now has a strategy of some kind to look for these types of fields,” he said. “We’ve built our team around chasing these.”
Re: Texas natural gas field vital to U.S. supply.
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