When Treadstone Energy Partners bought East Texas' Fort Trinidad Field in 2012, it was investing in what many saw as a tired gas condensate producer that had seen its heyday in the 1960s and 1970s, peaking at 9,500 barrels of oil equivalent per day (boe/d)--3,000 bbl/d condensate, 38 million cubic feet (MMcf) of gas. The field, discovered in the 1950s, yielded significant production from multiple Glen Rose reservoirs, with development concentrated in the Glen Rose C bench. The reservoir went into full blowdown beginning in 1975, and though it has seen continuous development since then, there have been few, if any, capital investments.
“This field has traditionally been a Glen Rose field, that’s what everyone has sold it as, that’s what everyone has bought it as, that’s what it’s been marketed as,” said Frank McCorkle, Treadstone’s president. “So it’s changed hands quite a few times over the past 20 years, always for Glen Rose, the deeper gas condensate field.”
But McCorkle and his team saw something else.
“Really, we just had a view of it being an oil play in the Buda and Georgetown, primarily,” he said. “And so, because of that, we had a different plan for it, a different strategy that allowed us to be able to bid high enough to acquire the field.”
It sounds absurdly simple: Plug some old wells, perf and frack the shallower intervals, and watch the oil flow. And though it was sometimes as simple as that, there was nothing absurd about the numbers. In mid-2012, the field’s production had dropped to 150 boe/d (20 bbl/d of condensate, 800 Mcf/d). By the end of 2013, Treadstone had grown production to 5,000 boe/d (4000 bbl of oil, 6 MMcf of gas). And production continues to grow, with May 2014 field production exceeding 9,000 boe/d (7,300 bbl of that oil) from only 36 producing wells.
“That field’s been producing for 60 years,” Key Sanford, Treadstone’s vice president of land and business development, said. “And it’s probably going to produce for another 50 to 70. Long after our kids have retired, that field will probably still be there.”
For its imagination and ingenuity in finding new life in an old field, Oil and Gas Investor has awarded Treadstone Energy Partners its 2013 Excellence Award for Best Field Rejuvenation.
Fort Trinidad Field began going into full blowdown in 1975, and in mid-2012, the field's production had dropped to 150 boe/d. By the end of 2013, after Treadstone had taken over, production had grown to 5,000 boe/d.
Treadstone, a private company based in Houston, was formed in 2011 with backing from Kayne Anderson. The founders (McCorkle, Sanford and vice president of engineering Gene Roberts), had worked together at BP Plc, where they served in key leadership positions during the company’s entry into the Eagle Ford Shale. The management team has a combined 65 years of industry experience.
After securing a $50 million equity commitment from Kayne Anderson, the company bought acreage in Alabama Ferry Field in Leon County, Texas, and began scouting in the general area. They found a trend of some old, but good, Buda and Georgetown wells.
Using “normal, readily accessible IHS-allocated production data,” according to Roberts, the company began investigating Fort Trinidad Field for the shallower trends. “It was really just spending the time. A lot of the shallow producing wells were from the late ’50s, early ’60s, so there was a little more detective work.”
Treadstone's Fort Trinidad position holds multiple wells that produce at or higher than their first month's production, even a year after coming online.
A month after the company began eyeing the field, it came on the market. Its owners were looking for a quick sale.
"The field had been HBP for 50 years and all the operators had focused on the Glen Rose, how to enhance or how to increase production out of that reservoir," Sanford said.
In mid-2012, Treadstone acquired the 18,000-acre field, with the intention to rework many of the original wellbores and frack them for the Buda and Georgetown.
The reservoirs are naturally fractured carbonate, but they suffered from connectivity problems. In the past, because the wellbores weren’t always drilled near a well-connected natural fracture, the wells could be hit-or-miss. Treadstone’s mission was to better connect the reservoirs to the wellbores through hydraulic fracturing.
"Previous operators in the area, using either openhole and/or perf/acid completions, would get a great well, and the one next to it would be very poor, because if they weren’t very close to a well-connected natural fracture, they wouldn’t get a good well,” McCorkle said. “So we decided to go in with some very large, propped fracks to connect up those natural fracture networks.” Treadstone also saw significant upside in commingling the Buda with the Georgetown, a 400-foot-thick carbonate section just below the Buda that had only been tested a few times in the field, with even more mixed results.
Bigger, stronger, better
After acquiring the field, Treadstone did five months of research, planning and strategizing. “We waited five months until we worked with every service company we could get in the door and got every idea we could before we went in and stimulated the first set of recompletion wells,” Roberts said.
Realizing the Buda/Georgetown trend that ran under the field differed from the segment that ran under the offset operators' field, Treadstone adopted a different frack strategy, consisting of “bigger, stronger, better fluids and sand,” according to Roberts. The company pays a premium for high-quality, premium resin-coated sand and better chemical packages, but on a two- or three-stage frack job, it’s worthwhile.
“When you’re on a horizontal well and you’re doing that on 30 stages, it really starts impacting the bottom line,” Roberts said. “That’s why a lot of the horizontal plays have been slow adopters to more sand/better fluid packages.
“When you’ve got a vertical well with $1.5 million to $2 million drilling costs and $500,000 to $600,000 completion costs, an extra $50,000 to $100,000 in completion costs doesn’t materially impact costs, but it can materially impact the quality of the stimulation and, therefore, long-term productivity of the well.”
There is significant stacked-pay potential in the East Texas Basin. Treadstone is preparing to exploit Glen Rose oil reservoirs in the near future. Top: Treadstone's production continues to grow, with May 2014 field production exceeding 9,000 boe/d from only 36 producing wells.
Treadstone also uses only a small amount of acid in the rock, which is 99% calcium carbonate, and uses limited perfs to better divert the fracture stimulation.
“Offset operators put as many as 300 to 350 perfs along the same interval that we do, and we have between 50 and 60 perfs,” Roberts said. “That’s a big step change in how much you’re concentrating the force of the frack and, we believe, increasing fracture complexity and connectivity to the natural fracture system.”
Four of the first five recompletions had originally been drilled for the deeper Glen Rose in the early 2000s. These wellbores left Treadstone with easy recompletion opportunities to test their concept before committing to picking up a rig to drill new wells.
“It was almost as simple as pulling tubing, running cast-iron bridge plugs over the Glen Rose zones, perforating and fracking the Buda and Georgetown,” Roberts said.
“Four of those early recompletions made 120,000 to 200,000 barrels of oil in the first year of production--from nothing more than setting plugs, setting new facilities and upgrading pads.”
Treadstone’s second recompletion alone churned out 1,000 bbl/d for its first month. “At $95 oil, it produced $2.5 to $3 million in revenues in the first month and it cost us $1.7 million to set a bridge plug and pump a two-stage frack,” Roberts said.
In just a few months, the wells were paying out enough to finance a rig for the company to drill its own wells. Though Treadstone has accessed small amounts of working capital from time to time, the field “basically spins off enough cash to fund the drilling program,” Sanford said.
Rate of incline
Typically, a fractured carbonate reservoir will decline rapidly. But Fort Trinidad Field holds multiple wells that produce at or higher than their first month’s production, even a year after they came online.
“We have one well that’s highest month is always the last month,” McCorkle said. That well is on month 13, having produced over 165,000 bbl of oil, and is still averaging nearly 600 boe/d.
The productivity is largely thanks to connecting the fracture network and reservoirs to wellbores through hydraulic fracturing.
“Because the section is so thick, if you can connect it all up, you get all the fluid expansion from the oil, the water, the solution gas drive, and you’ve just got a fracture system that’s refilling itself,” Roberts said. “By using hydraulic fracturing, we connected that entire volume, and it is providing a huge amount of pressure maintenance.”
So what of the buzz around the East Texas Basin as the “next big play?”
We came in with the view of ‘it’s not going to be as big as people were thinking,’” McCorkle said.
“Now, it’s bigger than I thought it was originally going to be, but not that much bigger. It’s definitely not a five- or six-county area where you can go and get acreage and you’re going to get a good well. It’s just not going to work like that.’”
With its core area now defined, the company is prepared to downspace to 40 acres.
“We’ve already done 80 acres and clearly do not see any impact or interference,” McCorkle said.
Additionally, the company is preparing to take advantage of the stacked-pay system of the East Texas Basin, beginning with, of all things, the Glen Rose.
“There are four really good benches of the Glen Rose, and really only one of them has effectively been developed, and that one we believe has tremendous upside in terms of enhanced oil recovery,” Roberts said. “This Glen Rose horizon has still got a lot of oil in it, it still makes oil today, 50 or 60 years after it first made oil. It’s just very low pressure and needs some help.”