Newfield Exploration, a long-time producer in the Gulf of Mexico, sought to diversify its portfolio. It was intrigued by a potential play in the Mid-Continent.
At a time when the region was off the radar screen for much of the industry, the Houston-based company saw an opportunity in the Arkoma Basin in southeast Oklahoma and began examining the Woodford Shale.
The results have been nothing less than phenomenal as Newfield’s is seeing up to 110 million cubic feet of natural gas production daily. The company’s drilling production has quadrupled within the past year alone, said Lee K. Boothby, Newfield’s Mid-Continent vice president.
‘Home Grown’ Drilling
The drilling program is a prime example of unconventional opportunities created as a result of recent advances in horizontal drilling and completion technology.
Geologists have a much better scientific understanding of how shale gas can best be extracted. Improved economics with higher natural gas prices make it cost effective to pursue large-scale drilling initiatives such as the Woodford, Boothby said.
Newfield has embraced technological and logistical challenges such as the Woodford Shale since October 2005. Keying on a target range, Newfield is collecting the residual by-products of shellfish, crustaceans and marine animals that died eons ago in the inland sea that covered this part of North America.
“This is a ‘home-grown’ play and our dominant acreage position was leased between 2003 and 2005,” Boothby said.
A “play” refers to a set of known or postulated oil and or gas accumulations that share similar geologic and geographic properties.
Growth in Tulsa
Newfield came to Tulsa in January 2001, purchasing the assets of Tulsa-based Latigo Petroleum, which had been operated by Randy Foutch.
Boothby was named vice president in February 2002. That year, Newfield invested $43 million in the region.
The Mid-Continent Region has grown to become the company’s largest focus area. Overall, Newfield expects to drill about 200 wells and invest approximately $700 million this year — a 15-fold increase in five years. The majority of that drilling will be the Woodford Shale play with about 150 horizontal wells this year.
More than 130,000 net acres are associated with its Woodford Shale in an area that covers 60 miles from north to south and 15 miles from east to west primarily in Hughes, Coal and Pittsburg counties.
In 2001 there were 110 employees in the Mid-Continent division. Today there are 270 employees division-wide, with 165 in the Tulsa office.
The Mid-Continent now represents 35 percent of Newfield’s total proved reserves.
The activity is part of a trend in the oil and natural gas industry, said Ray Brown, a geophysicist with the Oklahoma Geological Survey in Norman.
“Oil and gas companies are looking at every shale in the world because of the potential,” Brown said. “Everyone is trying to keep their shales a secret.”
Doing the Homework
While Newfield engineers suspected they had something, the company was brand new to the Mid-Continent and had no concrete evidence about the Woodford.
“We did what needed to be done, Boothby said. “Our technical folks did their homework. They gathered the data, did the mapping, performed the geological work including studying the Arkoma geology, looking at the outcrops and studying well-core samples.”
Finally, someone said, “Why not the Woodford?”
As their suspicions were proved correct, Newfield officials jokingly referred to the Woodford as the “Barnett Junior.”
Amazingly, there is another layer of shale above the Woodford, called the Caney Shale. Newfield continues testing it, and Boothby thinks it literally could be a “Barnett Junior.”
Newfield moves with a drilling program there in the second half of the year.
“Keep your fingers crossed for us.”
New Ideas Spark Tired Basin
In a day when companies are spending more time buying assets and trading assets, Newfield came to an old basin, that a lot of people had given up on, went out and explored it with new ideas, Boothby said.
“We are proud in terms of being able to take the risk and build the position that we have built,” he said. “We think it is a super play — a great play for our company, the community in which play is taking place — in McAlester the hotels are full, the restaurants are busy.”
Newfield, joined by other players looking for a piece of the action in the region, remains the most active company.
“We think it is the real deal,” Boothby said. ?