Dolomite Hunting

Savoy Energy’s #1-36 Clark, in Adams Township, Hillsdale County, Michigan, produces out of the Trenton-Black River.

Sometimes you just drill a hole in the ground and oil flows out. In these days of unconventional reservoirs, zipper fracs, mile-long horizontals and microseismic surveys, pursuing shallow, conventional oil exploration may seem dated.

And yet, in southern Michigan, there’s a vibrant play looking for dolomite chimneys in the Ordovician Trenton-Black River. Since 2006, nearly 50 producing wells have been drilled in the vintage Albion-Scipio trend in Hillsdale, Calhoun, Jackson and Lenawee counties.

The oil is top-quality, markets are readily available and the economics are outstanding. “Some of these wells practically pay out during testing,” says Harold Hamm, chairman and chief executive of Enid, Oklahoma-based Continental Resources Inc., one of the main operators in the play.

Fortunate find

Harold Hamm, chairman and chief executive, Continental Resources Inc., plans seven to eight wells in southern Michigan in 2010.

This gem of a play dates back decades, and no high-tech methods were involved in its discovery. Albion-Scipio Field was found in 1956 on the advice of a fortune-teller. As the story goes, a clairvoyant told a young Michigan woman, Ferne Housekecht, that a black river of oil lay beneath her Hillsdale County farm. She hired Clifford Perry, a driller and farmer, to drill a hole to test the prediction. It took two and a half years for Perry to get to 3,576 feet. That’s where he struck oil in the Trenton-Black River and opened Michigan’s biggest oilfield.

Albion-Scipio was a long, skinny field that produced from fractured dolomites developed along deep-seated faults. Through the 1960s and 1970s, some 800 wells were drilled on 20-acre spacing in the 30-mile-long stratigraphic trap. Thousands of dry holes accompanied the lucky producers, as the reservoir facies was less than a mile wide and difficult to hit.

The area enjoyed a flurry of renewed activity in the 1980s, when 12-million-barrel Stony Point Field, just east of Albion-Scipio, was discovered, allegedly with surface geochemistry. But by the 1990s, fewer than a dozen Albion-Scipio wells remained on production, and most of the field’s oil was exhausted. The string-like trend had made some 190 million barrels of oil, but its glory days appeared past.

Northside revival

?West Bay Exploration Co. kicked off the latest round of Trenton-Black River exploration with a discovery on the north end of the Albion-Scipio trend, says exploration manager Murray Matson.

In 2006, Traverse City independent West Bay Exploration Co. was looking for some new prospects. It was traditionally a Niagaran reef player, but that play was mostly over.

West Bay has its own seismic crew, so it decided to collect some 3-D data on the north end of the old Albion-Scipio trend. It shot a survey in a gap between Lee Field and the main Albion area in Calhoun County. The company wanted to look at the Trenton-Black River and evaluate other potential reservoirs.

It imaged a little fault spur that had not yet been drilled. Leases were open, as the area had been fallow for years. West Bay’s first well—the #1-12 Foote, in Marengo Township—was a success. In mid-2006 it was completed for 192 barrels of oil and 40,000 cubic feet of gas per day from Trenton perforations at 4,337-57 feet.

West Bay never looked back. “We have now drilled 30 wells in that area, in spurs off the north end of Albion-Scipio,” says Murray Matson, exploration manager. Twenty-four have been successful.

Estimated ultimate recoveries (EURs) range from 95,000 to 350,000 barrels of oil per well. The wells start production at the state allowable rate of 200 barrels a day, and after a year or so, West Bay cuts volumes back to avoid coning water up the fractures. Gas/oil ratios are about 500:1 in this area, so a 200-barrel well also makes some 100,000 cubic feet per day.

West Bay’s dry-hole costs run $500,000 per well. The surface is fairly swampy, so the company directionally drills a significant portion of its wells. Depths are between 4,000 and 4,500 feet. The only substantial drilling issue is lost circulation, due to the Trenton-Black River’s vugular porosity. “We often have to produce load water back for several days before the well comes on, due to water losses during drilling,” Matson says. Completions consist of small acid treatments.

In an exciting development, the company has moved to eastern Jackson County, where it has established a completely new producing area some 20 miles northeast of Stony Point Field. West Bay is on its eighth well, all of them successful, in its new Napoleon area in Norvell and Napoleon townships.

“We have some more wells to drill, and we will likely increase our activity in 2010,” says Matson.

Southern extension

Discoveries have expanded the play to the south and east of the historic trend as well.

Meanwhile, Enid, Oklahoma-based Continental Resources has been busy in the south end of the Albion-Scipio trend. “This play has been under the radar for a couple of years,” says Continental’s Hamm. “This is a case of using new technology in an old field.”

Continental’s Illinois division office generated the play more than three years ago. “It’s been a feather in their cap,” says Hamm. “They have done good work.”

Continental currently holds some 52,000 net acres in the play, mainly in Hillsdale County. Its first well, the #1-36 McArthur, was completed in mid-2007 in Adams Township, Hillsdale County, at a rate of 207 barrels of oil and 67,000 cubic feet of gas per day.

That rate belies the well’s potential: Continental engineers estimate that it holds recoverable reserves of 830,000 barrels of oil.

The company followed up that heartening success with a series of productive wells. To date, it has participated in 17 tests, both operated and nonoperated, and a dozen of those are successful.

“So far, the industry has drilled some 90 wells in this play and 45 have been productive,” says Hamm. Continental’s 74% success rate is running ahead of the overall southern Michigan record of 50%, he notes. Indeed, the play has been so prolific that the state’s daily oil production has grown 9% year-over-year.

Continental is currently drilling one well and completing another. Its dry hole costs are $575,000 and completed costs are $912,000, down 15% to 20% from the peak rates reached in mid-2008.

Recoveries are phenomenal: in Continental’s area, it’s possible to get EURs of a million barrels. “The wells are under 200-barrel-per-day allowables, but the reservoirs are capable of making thousands of barrels a day,” says Hamm. “We have seen permeabilities of 14.2 darcies, and we’ve encountered bit drops of up to 22 feet.”

At present, Continental is shooting its second operated 3-D survey. “We see 18 future locations on 3-Ds that we have shot to date, so we have a pretty good inventory to drill,” he says. Next year, the company is looking at a drilling program of seven to eight wells.

Huge acreage base

Another firm with a major presence in the Trenton-Black River is Traverse City-based Savoy Energy LP. The private firm has been working Michigan for decades, and it moved into the Trenton-Black River play a few years ago, says Bill Sperry, president and general counsel.

Today, Savoy holds 125,000 acres in Hillsdale, Jackson, Lenawee and Washtenaw counties. Like the other explorers, Savoy uses 2-D and 3-D seismic as primary tools to help locate the dolomite chimneys.

The Trenton-Black River play harkens back to the days when companies could discover oil at reasonable depths, says Bill Sperry, president of Savoy Energy LP.

Savoy has already drilled six wells in the trend, and will have four to six more drilled by year-end. In 2010 it anticipates drilling at least the same number of wells as this year.

“When the play broke open, acreage was available,” says Sperry. “Some areas hadn’t been leased for decades, since the heyday in the 1950s and 1960s.” Back then, explorers always believed there was more oil to be found, but the tools of the day couldn’t locate the linear trends, which jog around at various angles and can be only a few hundred feet wide.

“Seismic technology has now advanced to the point that we can use it to evaluate whether or not we have a prospect,” says Tom Pangborn, chief executive officer.

To date, Savoy has drilled two dolomite chimney discoveries in southern Michigan. The #1-25 Beach, in Adams Township, Hillsdale County, flowed 176 barrels of oil and 75,000 cubic feet of natural gas per day. Bottomhole pressure was 1,389 psi at 4,134 feet. The company’s #1-7A HD-1 Oldford was completed for 96 barrels of oil and 136,000 cubic feet per day in Hillsdale County’s Pittsford Township. Its bottomhole pressure was 1,210 psi at 3,610 feet.

The well was Savoy’s first horizontal discovery in the Trenton-Black River play, and the company believes it also is the first such industry discovery.

Savoy Energy holds 125,000 acres in the southern Michigan Trenton-Black River play, says Tom Pangborn, chief executive officer.

“In the best parts of the field, dolomite porosity can occur from the top of the Trenton to the bottom of the Black River,” says Pangborn. The wells can display cavernous porosity, and the reservoir can be produced down to extremely low pressures because the drainage is phenomenal.

“EURs can range all over the map,” says Sperry. In the old part of the play, several wells made 500,000 barrels on 20-acre spacing; current state spacing is 40 acres per well.

Naturally, such a reservoir is highly variable. Often, the Trenton-Black River will be half to two-thirds full of water. And, in some areas, over-dolomitization has destroyed permeabilities to the point that chimneys are not productive.

That said, there’s a lot of territory that could be productive. Most of the extension to date has been on the east, south and north sides of Albion-Scipio. The Trenton-Black River section is some 600 feet thick in the area of interest, divided more or less equally between the two formations. “Pay can be developed in either formation or both,” says Pangborn. Not as much has happened west of the old trend; in that direction the dolomite facies is pervasive so there are problems with trapping mechanisms.

Critically, there’s no restriction as to which formation can be dolomitized. The Michigan Basin is a carbonate/evaporate basin with massive evaporates that make great seals, with thick carbonate sections. Regionally, some areas have tight limestones that lend themselves to fracturing and dolomitization. “We see dolomite chimneys in more than one locale in the basin, and in more than one geologic age,” says Pangborn.

To highlight that point, more than 200 miles to the north, in northern Michigan’s Ogemaw County, Savoy has discovered an oil-filled dolomite chimney in the Devonian section, in rocks much younger than the Trenton-Black River. “We have learned that common wisdom doesn’t always follow reality,” says Pangborn.

Fallen leaves color the ground at a Trenton-Black River wellsite in southern Michigan.

The new find is highly productive. “It tested strong,” says Sperry. Savoy is currently building production facilities at the #1-36 Nelson, in West Branch Township. The company has not yet released official production rates or pressures on the well.

In addition to the Ordovician and Devonian, dolomite chimneys have been found in the Silurian in the Burnt Bluff-Clinton formation, notes Pangborn. With up-to-date seismic, the hunt for these reservoirs is on throughout the basin.

“In the past 10 years, most everything has been resource plays,” says Sperry. “This harkens back to the days when you could find oil at reasonable depths. It’s refreshing that all of the shallow oil in this country has not yet been found and fully developed.”