The Discovery, Reservoir Attributes and Significance of the Hawkville Field and Eagle Ford Shale Trend - A Texas Giant North American Gas Discovery* Richard K. Stoneburner1 Search and Discovery Article #10552 (2013) Posted December 9, 2013 *Adapted from oral presentation given at AAPG International Conference and Exhibition, Cartagena, Colombia, September 8-11, 2013. Please refer to closely related article by the author; it is entitled “The Exploration, Appraisal and Development of Unconventional Reservoirs: A New Approach to Petroleum Geology, Search and Discovery Article #41115 (2013). **AAPG © 2013 Serial rights given by author. For all other rights contact author directly. 1 Advisor to Pine Brook Partners; Director for Newfield Exploration, Yuma Exploration and Cub Energy, (stoneburner@dontknow.com) Abstract The discovery of the Hawkville field in October, 2008, represented the first commercial production from the Eagle Ford Shale. Since that time the trend has seen a remarkable surge in drilling activity that has resulted in a current production level of almost 1 million barrels of oil equivalent per day. The discovery process by the Petrohawk Energy Corporation exploration team followed by the detailed petrophysical evaluation of the reservoir character verified that the Eagle Ford shale is truly a world class shale reservoir that has changed the landscape of hydrocarbon production from both the state and the country. The exploration process was a classic example of the "inside out" approach utilized in exploring for unconventional reservoirs, as contrasted to the "outside in" approach utilized in exploring for conventional reservoirs. The subsurface study identified a local area in LaSalle and McMullen Counties that displayed excellent petrophysical parameters in the Eagle Ford. A geochemical analysis was then performed on cuttings from a well in the area of interest that produced favorable results. Lastly, a seismic signature was identified that enabled a discreet, but very large, buy outline to be defined. A total of approximately 160,000 acres was quickly assembled and a well was then drilled and completed. The entire process from concept to discovery only took approximately 10 months. Subsequent to the discovery a thorough petrophysical, geochemical and geomechanical study was undertaken to better understand all aspects of the reservoir. The basis for this study was the data derived from the discovery well and pilot well program, with the data acquired from the whole core grid providing the basis for the study. Once the core data was acquired, a methodical effort was made to calibrate the core data to the open-hole log data. The resulting data set provided the basis for a wide array of interpretations that greatly aided the appraisal process. The discovery of the Hawkville field and other discoveries made by industry partners in the Eagle Ford made it apparent that the trend was going to provide a significant boost to the production of oil, gas and natural gas liquids in the United States. The effects of that production increase are beginning to make a difference in the security of the country’s hydrocarbon supply. However, the potential for significant production growth beyond what has already been achieved could greatly enhance our prosperity. “The Discovery, Reservoir Attributes and Significance of the Hawkville Field and Eagle Ford Shale Trend: A Texas Giant North American Gas Discovery” AAPG ICE: Discovery Thinking Forum September 10th, 2013 Richard K. Stoneburner Formerly: President and COO Petrohawk Energy and President NA Shale Production Division BHP Billiton Petroleum Currently: Advisor to Pine Brook Partners; Director for Newfield Exploration, Yuma Exploration and Cub Energy Growth of North American Shale Production • The development of isolated multi-stage hydraulic fracturing in 2006 caused a dramatic increase in shale production 7,0 Development of isolated multi-stage hydraulic fracturing Marcellus Today 6,0 Barnett BCFE/D 5,0 Haynesville 4,0 3,0 2,0 1,0 ,0 Fayetteville Marcellus Woodford Eagle Ford Exploration Process Unconventional Exploration: A Different Way of Thinking Conventional Unconventional • Project identification focuses “outside in” • Project identification focuses “inside out” • Seismic control works “outside in” • Seismic control works “inside out” • Stratigraphic support eventually focuses on the facies analysis local to the prospect • Stratigraphic support focuses on analysis of the entire basin • Reservoir quality analysis is required over a very broad area of the basin • Reservoir quality issues are relegated to the area of the prospect Prospect Identification: Conventional Analogy K2 Shenzi Prospect Neptune Mad Dog Atlantis 0 Discoveries • • • • 20000 US feet Deep Water Gulf of Mexico Prospect Structurally controlled and supported by local analogs At time of Prospect Identification, three significant analogs in the area of the prospect The area of the prospect was on the order of 10K acres with resource potential of 100-200 MMBOE Prospect Identification: Unconventional Analogy GUADALUPE GONZALES BEXAR LAVACA WILSON DEWITT VICTORIA FRIO ZAVALA ATASCOSA GOLIAD MAVERICK CHOKE CANYON RESERVOIR DIMMIT BEE COLETO CREEK RESERVOIR LIVE OAK LAKE CORPUS CHRISTI WEBB DUVAL • • • • Eagle Ford Shale Prospect Known regional source rock across large petroliferous basin Reservoir quality and geochemical attributes poorly understood The area was >10 MM acres with high side resource potential of >10 BBOE Case Study for Unconventional Exploration: Hawkville Field •In early 2008 the CEO of Petrohawk charged the Exploration team to find another “Haynesville-like” play o Our Fayetteville and Haynesville experience provided a level of experience in evaluating shale reservoirs that potentially allowed for a quick evaluation •We targeted the Eagle Ford Shale based on its significance as a regional source rock o Q1: Mapped the Eagle Ford across the entire Gulf Coast Basin and identified an anomalously thick, porous and highly resistive Eagle Ford section in La Salle and McMullen Counties o Q2: Acquired Eagle Ford cuttings on a key well and had them analyzed for TOC, VRo and other key parameters o Q3: Acquired ~160,000 acres and spudded the initial test well o Q4: Completed it in October 2008 for 7.6 Mmcf/d and 251 Bc/d Hawkville Field in Early 2008 X/Y: 1454700 1459700 1464700 1469700 1474700 1479700 1484700 1489700 1494700 1499700 1504700 1509700 1514700 1519700 1524700 1529700 1534700 1539700 1544700 1549700 1554700 1559700 1564700 1569700 1574700 1579700 1584700 1589700 1594700 1599700 1604700 1609700 1614700 1619700 1624700 1629700 1634700 1639700 1644700 1649700 1654700 1659700 1664700 1669700 1674700 1679700 1684700 1689700 1694700 1699700 1704700 1709700 1714700 1719700 1724700 1729700 1734700 1739700 1744700 1749700 1754700 1759700 1764700 1769700 1774700 1779700 1784700 1789700 1794700 1799700 1804700 1809700 1814700 1819700 1824700 1829700 1834700 1839700 1844700 1849700 1854700 1859700 1864700 1869700 1874700 1879700 1884700 1889700 1894700 1899700 1904700 1909700 1914700 1919700 1924700 1929700 1934700 1939700 1944700 1949700 1954700 1959700 1964700 1969700 1974700 1979700 1984700 1989700 1994700 1999700 2004700 2009700 2014700 2019700 2024700 2029700 2034700 2039700 2044700 2049700 2054700 2059700 2064700 2069700 2074700 2079700 2084700 2089700 2094700 2099700 2104700 2109700 2114700 2119700 2124700 2129700 2134700 2139700 2144700 2149700 2154700 2159700 2164700 2169700 2174700 2179700 2184700 2189700 2194700 2199700 2204700 2209700 2214700 2219700 2224700 2229700 2234700 2239700 2244700 2249700 2254700 2259700 2264700 2269700 2274700 2279700 2284700 2289700 2294700 2299700 2304700 2309700 2314700 2319700 2324700 2329700 2334700 2339700 2344700 2349700 2354700 2359700 2364700 2369700 2374700 2379700 2384700 2389700 2394700 2399700 2404700 2409700 2414700 2419700 2424700 2429700 2434700 2439700 2444700 2449700 2454700 2459700 2464700 2469700 2474700 2479700 2484700 2489700 2494700 2499700 2504700 2509700 2514700 2519700 2524700 2529700 2534700 2539700 2544700 2549700 2554700 2559700 2564700 2569700 2574700 2579700 2584700 2589700 2594700 2599700 2604700 2609700 2614700 2619700 2624700 2629700 2634700 2639700 2644700 2649700 2654700 2659700 2664700 2669700 2674700 2679700 2684700 2689700 2694700 2699700 2704700 2709700 2714700 2719700 2724700 Feet 535000 535000 530000 530000 525000 525000 520000 520000 515000 515000 510000 510000 505000 505000 500000 500000 495000 495000 490000 490000 485000 485000 480000 480000 475000 475000 470000 470000 465000 465000 460000 460000 455000 455000 450000 450000 445000 445000 440000 440000 435000 435000 430000 430000 425000 425000 420000 420000 415000 415000 410000 410000 405000 405000 400000 400000 395000 395000 390000 390000 385000 385000 380000 380000 375000 375000 370000 370000 365000 365000 360000 360000 355000 355000 350000 350000 345000 345000 340000 340000 335000 335000 330000 330000 325000 325000 320000 320000 315000 315000 310000 310000 305000 305000 300000 300000 295000 295000 290000 290000 285000 285000 280000 280000 275000 275000 270000 270000 265000 265000 260000 260000 255000 255000 250000 250000 245000 245000 240000 240000 235000 235000 230000 230000 225000 225000 220000 220000 215000 215000 210000 210000 205000 205000 200000 200000 195000 195000 190000 190000 185000 185000 180000 180000 175000 175000 170000 170000 165000 165000 160000 160000 155000 155000 150000 150000 145000 145000 140000 140000 135000 135000 130000 130000 125000 125000 120000 120000 115000 115000 110000 110000 105000 105000 100000 100000 95000 95000 90000 90000 85000 85000 80000 80000 75000 75000 70000 70000 65000 65000 60000 60000 55000 55000 50000 50000 45000 45000 40000 40000 35000 35000 30000 30000 25000 25000 20000 20000 15000 15000 10000 10000 5000 5000 0 0 -5000 -5000 -10000 -10000 -15000 -15000 -20000 -20000 WILSON DE WITT ZAVALA FRIO KARNES ATASCOSA VICTORIA MAVERICK GOLIAD Phillips LaSalle #1 MCMULLEN DIMMIT BEE LA SALLE Swift Pielop #1 • • • LIVE OAK Very limited well control in prospective area Prospect was located in a regional setting between two divergent shelf margins, which suggested the presence of a “mini-basin” While the geochemical properties were unknown, the depth range (10,00011,500’/3050m-3500m) suggested a relatively mature source rock 1454700 1459700 1464700 1469700 1474700 1479700 1484700 1489700 1494700 1499700 1504700 1509700 1514700 1519700 1524700 1529700 1534700 1539700 1544700 1549700 1554700 1559700 1564700 1569700 1574700 1579700 1584700 1589700 1594700 1599700 1604700 1609700 1614700 1619700 1624700 1629700 1634700 1639700 1644700 1649700 1654700 1659700 1664700 1669700 1674700 1679700 1684700 1689700 1694700 1699700 1704700 1709700 1714700 1719700 1724700 1729700 1734700 1739700 1744700 1749700 1754700 1759700 1764700 1769700 1774700 1779700 1784700 1789700 1794700 1799700 1804700 1809700 1814700 1819700 1824700 1829700 1834700 1839700 1844700 1849700 1854700 1859700 1864700 1869700 1874700 1879700 1884700 1889700 1894700 1899700 1904700 1909700 1914700 1919700 1924700 1929700 1934700 1939700 1944700 1949700 1954700 1959700 1964700 1969700 1974700 1979700 1984700 1989700 1994700 1999700 2004700 2009700 2014700 2019700 2024700 2029700 2034700 2039700 2044700 2049700 2054700 2059700 2064700 2069700 2074700 2079700 2084700 2089700 2094700 2099700 2104700 2109700 2114700 2119700 2124700 2129700 2134700 2139700 2144700 2149700 2154700 2159700 2164700 2169700 2174700 2179700 2184700 2189700 2194700 2199700 2204700 2209700 2214700 2219700 2224700 2229700 2234700 2239700 2244700 2249700 2254700 2259700 2264700 2269700 2274700 2279700 2284700 2289700 2294700 2299700 2304700 2309700 2314700 2319700 2324700 2329700 2334700 2339700 2344700 2349700 2354700 2359700 2364700 2369700 2374700 2379700 2384700 2389700 2394700 2399700 2404700 2409700 2414700 2419700 2424700 2429700 2434700 2439700 2444700 2449700 2454700 2459700 2464700 2469700 2474700 2479700 2484700 2489700 2494700 2499700 2504700 2509700 2514700 2519700 2524700 2529700 2534700 2539700 2544700 2549700 2554700 2559700 2564700 2569700 2574700 2579700 2584700 2589700 2594700 2599700 2604700 2609700 2614700 2619700 2624700 2629700 2634700 2639700 2644700 2649700 2654700 2659700 2664700 2669700 2674700 2679700 2684700 2689700 2694700 2699700 2704700 2709700 2714700 2719700 2724700 Key Finding #1: World Class Petrophysical Properties Atascosa_bee_dewitt_gonzales_liveoak_lasalle_maverick_webb_wilson 10920 10940 10960 10980 11000 11020 11040 11000 Log Depth(ft)0 10900 0 Log Depth(ft) 10900 10920 10940 10960 10980 11000 11020 11040 11060 11080 11080 11100 11100 11060 11100 11120 11140 11140 11160 11160 11180 11180 11200 11200 11120 11200 11220 11220 11240 11240 11260 11280 11300 Buda 11300 •Well was drilled in the early ‘90’s, probably targeting the Cretaceous Olmos Sands •Eagle Ford tested small amount of gas after light acid treatment •Over 250’ (75m) of Eagle Ford greater than 9% density, with majority greater than 15% (~100% Net/Gross) •Excellent resistivity •Gamma Ray character indicative of “coarse”-grained mudstone Primarily oil Pielop 1 Swift Significant portions GR AT90 PHIDEDIT Resistivity Density de-risked 120 0 100 0.3 Early entry, low avg. Eagle Ford Shale cost Scalable Longer-term leases Low near-term capital requirements 11260 11280 11300 Key Finding #2: Positive Geochemical Analysis Phillips LaSalle #1 D&A in 1952 Eagle Ford Shale Gas Risk Assessment Diagram TOC (0-5) AC EFS Tr (50 – 100) Ro (0.2 – 2.2) Minimum Threshold BUDA Phillips LaSalle #1 Tmax (435 - 470) Dryness (0 – 100) Key Finding #3: Seismic Defines the Optimum Reservoir Thickness MT 3D CookWest MIG TVF, 401, 1130 SP: 4800.0 4820.0 MT GT LR-37, 160.74 MT 3D LAKEWOOD - BURKS MT RANCH, GT 77-16,1482, 378.02 125 4840.0 - MT GT 65-253 616 MIG TVF 4900.0 4880.0 4920.0 MT 3D LAKEWOOD - BURKS RA 4940.0 4960.0 4980.0 Dora Martin 2H Dora Martin 4H Dora Martin 1H Dora Martin PH 1 Dora Martin 2H 1H 1.500 • The anomalously thick Eagle Ford at Hawkville could be identified with 2D seismic data MT GT 927 MIG TVF, 1368.54 4860.0 1.600 Isochron Thick in Center of Hawkville Field 1.700 1.800 1.900 EFS Res Res EFS 2.000 • A grid of existing 2D data was acquired that allowed the mapping of the Eagle Ford >150’ (45m) EFRT EF SR es Buda 2.100 2.200 Eagle Ford Shale 2.300 2.400 2.500 Data Courtesy of Seitel, Inc. Hawkville Field in Late 2008 Petrohawk Energy Dora Martin #1H Spud Date:09/2008 1st Prod: 01/2009 Petrohawk Energy STS #1H Spud Date:07/2008 1st Prod: 10/2008 Fall 2008 Petrohawk Acreage Position ~160,000 net acres The Eagle Ford Shale in 2013 Eagle Ford Shale Competitor Map A New Set of Lights Visible From Space Appraisal Process The Appraisal Process: Core Data and “Core to Log” Data are Critical • There is nothing more critical to the evaluation of a shale resource than the extensive data gathered from whole core analysis: o Measurement of “conventional” reservoir attributes such as Porosity, Sw, Permeability, etc. o Identify and measure the mineralogy, specifically clay minerals versus “coarse”grained constituents o Measurement of key geochemical (TOC, Thermal Maturity, etc.) and geomechanical attributes (Young’s Modulus and Poisson’s Ratio) o Most importantly, calibrate core measurements to conventional open-hole log suites, thereby expanding knowledge regarding reservoir characterization, formation evaluation (OGIP, Recovery and EUR) and optimization of the hydraulic fracture stimulation Basic Petrophysical Workflow Core Data Xplots TOC Porosity Permeability Saturation Lithology Geomechanics ALGORITHMS Interpreted Log Curves Cluster Analysis Facies Classification Core to Log Calibration: TOC-Porosity-Permeability Triple Combo TOC TOC/RHOB Fair correlation coefficient r2 ~ 0.65 Ø-Total RHOB 1 2 3 4 HC-filled porosity 4 Ø-HC Max Perm 6 Porosity Highest correlation coefficient r2 ~ 0.93 Total porosity Permeability Least dependable of the algorithms (use qualitatively and in localized zones) Ø-HC 5 Sw based on default Rw ~ 0.025 Core to Log Process: Expanding the Data Set 1 2 3 GR-TOC RES 4 5 PORO-PERM SATURATION 6 7 8 9 1 0 1 1 1 2 LITHOLOGY 1 3 1 4 1 5 FRACTURE PROPAGATION Top Shale Base Shale TOC distribution Sweetspot screening Rock properties from ECS-type tool should dovetail with geomechanical descriptions Frac properties from DTC-DTS 1 6 An Example of Utilizing the Expanded Data Set Facies extracted from Crossplot YOUNG’S MODULUS F B E A-2 C D A-1 A-3 A-4 POISSON’S RATIO Cluster Analysis Poisson’s Ratio vs. Young’s Modulus Lambda*Rho vs. Mu*Rho (or any other attribute combination) A Key Aspect of Quality Shale Reservoirs: Vertical Heterogeneity GR 0 0 200 COREGR_ api DEPTH FT PS 200 PS K 72 SB PS PS PS K 69 SB 12750 PS PS PS PS PS PS PS PS P S 12800 K 65 MFS PS P S PS PS PS 12850 K 64 SB PS P S 12900 PS PS PS PS BUD A PS K63 SB PS PS Buda 12950 P S PS Courtesy of Core Laboratories Micro-Textural Relationships: The Importance of Scale 0.5 mm Standard 30 micron thick slide: No apparent grain support which would suggest poor reservoir quality Ultra Thin (20 micron) slide: Significant grain support which leads to better reservoir quality Courtesy of Core Laboratories Depth, feet The Importance of “Coarse”-Grained Constituents: MINERALOGY by XRD Eagle Ford Shale (PC-Q #1H) 11334.0 11350.5 11366.5 11382.5 11398.0 11414.0 11430.0 11446.0 11462.0 11478.5 11495.0 11510.5 11526.0 11542.0 11558.0 11574.0 11590.0 11606.0 11623.0 Austin Chalk Eagle Ford Buda 0 20 40 60 80 100 Volume Percent Qtz Plg Cal Dol Pyr Mar I/S I/M Chl Kao Ker Courtesy of Core Laboratories Eagle Ford: Mineralogical Variation Across the Trend Maverick Basin Area • Clay content increases from west to east • Kerogen content remains relatively constant • Increase in clay resultant from clastic influence of the East Texas Basin Hawkville Area San Marcos Area East Texas Area QTZ % 20% CARBONATE % 40% 60% CLAY % 80% KEROGEN % 100% Courtesy of Core Laboratories The Importance of Stress Isotropic ‘Tempered’ Glass: One extreme Anisotropic ‘Natural’ Glass: The other extreme Preferred: Something in between Courtesy of Core Laboratories Development Process 3D Seismic Data: Unconventional Approach is After Discovery, Not Before • The cost of 3D seismic data is minimal in the total field development cost, is not critical to the exploration process • 3D seismic data is critical in identifying faults and dip changes that could compromise the stratigraphic targeting of a horizontal wellbore • Merged ~650 square miles (~1100 square kilometers) of acquired proprietary data and licensed data in Hawkville Field Geo-Steering: An Important New Geoscience Skill Set Horizontal drilling creates significant geological challenges o Unforeseen dip changes and/or faults can cause a well to be out of zone for a large portion of a lateral The combination of 3D seismic data and MD to TVD Gamma Ray correlation allows the geologist to direct the drilling operation in order for the well to stay within the target window The post-drill geologic interpretation of the wellbore can cause the completion engineer to design the fracture geometry to conform to the geology of the wellbore The use of the geologic interpretation can be utilized with production logs to determine which portions of the wellbore are contributing and why Stage by Stage Fracture Stimulation Montage: Geometric Completions vs Geologic Completions? The Eagle Ford After Five Years Approximately 10,000 wells have been permitted to date with more than 200 rigs operating and approximately 290 wells being drilled each month Average EUR across the play is ~450 MBOE Risked remaining resource is estimated at 28 BBOE from over 70,000 undrilled locations o Current B/E prices are $62/BBL rising to $100 by 2019 At B/E price below $90/BBL, EOG and BHP have remaining resource 2.2 BBOE and 1.7 BBOE, respectively, with B/E price of $62/BBL Spacing assumptions range from 110 acres in the dry gas areas to 40 acres in the oil window Source: ITG Energy Play Report July 24, 2013 MMCFG/D Eagle Ford Natural Gas Production Growth 2008-2013 YEAR Source: Texas Railroad Commission Production Data Query System 2013 thru Q1 OIL & CONDENSATE/MBD Eagle Ford Oil and Condensate Production Growth 2008-2013 YEAR Source: Texas Railroad Commission Production Data Query System 2013 thru Q1 DAILY PRODUCTION BOE/D Eagle Ford Oil Drilling Permits 2008-2013 YEAR Source: Texas Railroad Commission Production Data Query System 2013 thru Q1 TOTAL DRILLING PERMITS Eagle Ford Oil Drilling Permits 2008-2013 YEAR Source: Texas Railroad Commission Production Data Query System 2013 Annualized from Q1 Conclusions The Eagle Ford has proven to have all of the right ingredients for a world class shale reservoir o Petrophysical parameters that are among the best, if not the best, of any known shale reservoir o A wide range in depth (approx. 5000’-13,000’/1500m4000m) results in complete spectrum of hydrocarbon products o A majority of the trend is in moderate geopressure, providing for significant hydrocarbon volumes in place o Favorable regulatory and mineral owner environment These factors have lead to growth in the Eagle Ford that is truly unprecedented