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Gas Stimulation Is Industry's Latest Bet to Unlock Utica Oil Window

EV Energy Partners LP has started flowing back its closely watched Nettle 3H well in Tuscarawas County, OH, in the heart of the Utica Shale's stubborn volatile oil window, where an industry partnership has used gelled butane to stimulate the well in the latest effort to get oil flowing there.

Company spokesman Ron Whitmire said it's still too early to discuss any results from the project. EVEP has not ruled out releasing results sometime soon. The project’s progress has been kept a secret, but it’s still managing to generate a significant amount of buzz among industry onlookers in the state.

"You could always follow the trucks" to see exactly where the well is located and what's going on at the site, said Roger Meyers, vice president of completion services for Atlas Resource Partners LP, who has knowledge of using hydrocarbons to stimulate wells. He delivered a presentation on the topic to a packed and interested crowd last week at the Ohio Oil and Gas Association’s (OOGA) Oilfield Expo and Technical Conference.

Whitmire confirmed that Calgary-based Gasfrac Energy Services Inc. had been contracted to use its proprietary technology to stimulate the Nettle 3H.

Meyers was sent to the oilfield expo with data provided by Gasfrac in its absence, where he fielded a noticeable amount of questions about the technology's viability, its costs compared to using water and its potential for wide-scale application in the Utica's oil window, located to the north and west of the play's sweet spot. He said the company had used a mix of about 30% mineral oil and 70% butane to stimulate the well.

"You're talking about very large scale data collection. This is a very important well, and again, it's about getting the oil window to flow," said OOGA Senior Vice President Shawn Bennett. "There's a lot of research and development going on with this project, and in the case of them keeping it under wraps, it's a case of capitalizing on the investment you're making."

EVEP CEO Mark Houser told analysts at the Wells Fargo Annual Energy Symposium in New York City earlier this week that about 95% of the Utica's 1,238 unconventional wells have been drilled in the wet and dry gas windows. Early on, many believed the play would be analogous to the Eagle Ford Shale in South Texas, with distinct oil, condensate, wet and dry gas windows. But producing oil has proved to be a challenge, with Devon Energy Corp. striking out early on the Utica's western fringes and operators reporting poor results in the play's northern tier (see Shale Daily, June 27).

Low formation pressures and extremely impermeable rock are thought to make it difficult for the oil to move in those areas, and minimizing reservoir damage has been difficult.

"In terms of the activity going on, to summarize, there's been a good bit of increase in the volatile oil window. Chesapeake drilled the Parker well [in Tuscarawas County]," Houser said. "It was super fracked. It was done with about 2,500 pounds of frack sand per foot. Putting that in perspective, most wells historically had been fracked with 1,500-1,800 pounds per foot. So they put a lot more sand on that well. It's been the best horizontal oil window well drilled to date.

"The early wells, frankly, didn't work. Again, we believe it was technology and our understanding of how to frack these. All the partners have been encouraged by these results," he added, referring to the Parker well and the latest efforts at the Nettle 3H.

In all, 50 volatile oil wells have been drilled in the state, while just 10 black oil wells have been drilled further to the north, according to EVEP data. Gasfrac did not respond to an interview request. But Meyers said using mineral oil and butane in the Utica's oil window could work out better than it has in other fields, where using gas to stimulate wells in Canada, the lower Huron Shale and Colorado's Wattenberg Field has seen a limited degree of success.

"It's not necessarily new pumping LPG (liquefied petroleum gas), believe it or not...a long time ago, when folks were looking at shale, they said 'gee, we don't want to put all that water down there,'" Meyers said. "Just because something doesn't work in one play, or one shale, doesn't mean it can't work in another."

As early as the 1970s, companies were using propane, liquid carbon dioxide, liquefied natural gas, or a combination thereof to stimulate wells. Meyers said the technology is better suited to where water is not readily available, in water-sensitive formations, those with low bottom-hole pressure, or even in areas where operators have had poor results with large slickwater fracks. Hydrocarbons, he said, are also easier to gel. Gas also has less viscosity than water and it moves more easily through rock.

"What's interesting about butane is that unlike water, when you're pumping down hole, it's easier to capture on flowback," Bennett said. "The problem with water, especially in the Utica oil window, is you're getting a small percentage back. There's clay inside that rock that swells considerably the minute water hits it and prohibits free flow back to the surface. The gas gets through those spaces easier."

Mineral oil is being used, Meyers said, because it's easily gelled to run through the blender and carry proppant.

EVEP, which has a Utica joint venture with Total E&P USA and Chesapeake Energy Corp. has been discussing the oil window's potential for sometime now. It's also one of the play's largest leaseholders. Even though the company still considers the formation a key growth driver, it announced in November that it would begin marketing 120,000 net acres of its operated and non-operated Utica assets next year (see Shale Daily, Nov. 11), some of which are located within the company's area of mutual interest with Chesapeake and Total, Houser said.

Houser said Chesapeake, which has drilled nearly half of all the Utica Shale's unconventional wells, is gearing up to try butane stimulation on one of its Utica oil wells early next year.

"We believe that by not using water when we frack, we are helping to reduce the risk of damaging the zone," Houser said. "We feel like these particular shales have a good bit of under-saturated clay and exposing them to water reduces the flow capacity of the rock.

"But we also feel good that Chesapeake is also actually going to be doing this," he added. "And we feel very good that eight other industry partners are participating in this well -- and these are some leading partners in terms of shale and oil shale drilling."

There still remains significant concerns about the costs of the technology and its commercial applications. Industry sources toldNGI's Shale Daily that the Nettle 3H well is costing the companies involved.

A typical job uses about 170,000 gallons of butane and roughly 200,000 pounds of proppant, Meyers said. Factor in a North American pressure pumping market that's flush with successful water-based equipment and those who heard Meyers' presentation seemed skeptical of the technology.

Don Fischbach, chairman of the energy law group at Calfee, Halter & Griswold in Cleveland, who formerly served as general counsel for Continental Resources Inc., said that at the very least, attempts to stimulate the oil window with gas demonstrate the industry has not given up on its potential.

"It's a viable option, and it shows that the industry is motivated to buy a better mousetrap," he said. "The truth is, I think the industry will eventually solve the riddle of the oil window in Ohio. The hydrocarbons are there, it's no different than the Bakken back in 1975. Every borehole is a data point."

Fischbach questioned the costs of using butane as well, but he said if it is successful in Ohio, it could give the industry another problem to work on in the long run.

"This is just a first step. Think about it in this perspective, if it works, it could be a situation where they could use that associated gas from crude production to run on their next venture," he said. "For one, it allows them to produce those kind of wells without an infrastructure system to take the gas and minimizes the impacts of associated gas production. It would have to be processed, but it could at least be used as a stock to generate from."

Bennett added that the technology is a long way from proving itself in the Utica.

"If it's a home run, you'll see it used again, but it's not going to be one off and out of the gate," he said. "They're going to gather data, refine that data and use it to improve the process and bring down the costs if they can."

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