North Carolina, better known for coal deposits and mining, also has prospective source rocks, seals, reservoirs and traps necessary for petroleum accumulation. Geologists with the North Carolina Geological Survey have identified shale deposits in Lee, Chatham, Moore, Montgomery, Richmond and Anson counties. In total, about 154,000 acres across North Carolina are prospective for shale or tight-gas exploration.

“We believe the Sanford sub-basin, Deep River Basin, is a total petroleum system,” says Jeff Reid, senior geologist, North Carolina Geological Survey.

The survey has extensively studied the Deep River Basin, a 150-mile-long, Mesozoic rift basin that stretches across the east-central part of the state from north to south. At the same time that the African rift valley lakes were being formed about 220 million years ago, rift basins with potential for hydrocarbons were forming in North America.

North Carolina’s Deep River Basin has three sub-basins—Durham, Sanford and Wadesboro—that have approximately 7,000 feet of Triassic strata. So far, the Sanford sub-basin contains the most prospective unconventional shale formations. The three sub-basins are filled with approximately 7,000 feet of Triassic strata, which are divided into three formations, in descending stratigraphic order: the Sanford formation, which is siltstone and shale; the Cumnock formation, black shale with some gray shale, sandstone and coal components; and the Pekin formation, gray sandstone and shale.

The Upper Triassic Cumnock is the most attractive target, based on what is known today. It is approximately 800 feet thick and extends across about 25,000 acres at depths of less than 3,000 feet in Lee and Chatham counties. The shale is gas-prone, with a total organic carbon (TOC) that exceeds 1.4% in places. In addition, outcrops and subsurface information indicate that the shale is fractured and exhibits intergranular porosity and permeability.

North Carolina has a long history of exploration for coal, but oil and gas work has been minimal. Between 1925 and 1998, 128 petroleum exploration holes were drilled in North Carolina. The 1980-1990s saw a small burst of effort, with a number of exploration wells drilled, and some seismic, aeromagnetometry and air-gravity surveys acquired.

Some teasers were found. Two shut-in gas wells were drilled in 1998 in North Carolina: the #3 Butler and the #1 Simpson. According to state records, dry gas tested in each of these wells had Btu contents between 577 and 986.

The #3 Butler in Lee County had the highest pressure of all wells at 900 psi, followed by #1 Simpson at approximately 240 psi. “Each well had higher pressure readings while drilling than the reported pressure measured in March 2009,” says Reid. “The nitrogen-foam frac jobs performed on the wells appears to have failed.” Of note, the gas in some wells contained some nitrogen, likely from a stratigraphic unit associated with the Cumnock formation. That could be packed off.

Additionally, the nearby #1 Dummitt Palmer was drilled in 1991 for coalbed methane.

Now, interest is growing again in the Tar Heel State’s potential, especially for shale. Including holes that were drilled for coal exploration, of the 44 coal or hydrocarbon tests that have intersected the Cumnock formation, 12 have recorded oil, gas or asphalt shows. North Carolina’s old coal mines, long abandoned, were “gassy” and had a series of fatal explosions. Tests on the Cumnock formation run by state geologists indicate that the shale has the thermal maturity suitable to generate hydrocarbons.

The North Carolina Geological Survey has compiled a geochemical database that includes new gas chemistry and quality data, notes Reid. The state survey is also participating with the U.S. Geological Survey to assess the energy potential of North Carolina’s Mesozoic basins.

And, approximately 75 miles of available seismic provides 3-D control in the Sanford and parts of the Durham sub-basins, notes Reid. Preliminary interpretations suggest that there could be multiple stratigraphic and/or structural targets present in the deeper parts of the Sanford sub-basin.

Currently, state regulations, developed in 1945, prohibit horizontal drilling and hydraulic fracturing, so large-scale commercial shale development could not take place unless those regulations were revised. The in-place permit fees and royalties are quite reasonable, however, and vertical work is allowed. The per-well charge is $50 with $5,000 for bonding and the state charges royalties of $.005 per thousand cubic feet of gas.

Marketing any discovered gas should be fairly straightforward. The counties of Lee, Moore, Montgomery, Richmond and Anson, in the heart of the Deep River Basin, lie to the south of the more densely populated and industrial Research Triangle counties of Wake and Durham.