Richard Mason

It may take three to tango in the Tuscaloosa marine shale. One thing is certain, there will be more dance cards punched in the second half of the year as the Tuscaloosa fairway across central Louisiana and southwest Mississippi heats up with its own version of Dancing With the Stars.

Yes, it’s still early in the Tuscaloosa. There are less than a dozen wells either drilling or completed in the most recent round, which features horizontal tests of varying lateral length to appraise large acreage positions. At this stage, Tuscaloosa step-outs sometimes involve 20 miles, providing that little kick that excites the Wall Street audience.

But the land grab is well advanced in a play that covers 3 million acres in the high-resistivity core area in the east. Previously, the Tuscaloosa featured a low barrier to entry, with acreage prices gradually rising from less than $150 or so 18 months ago to $450 recently.

Encana Corp., which is running two rigs in the play, is an early favorite among the panel judges, partly because of its experience in the Haynesville shale, partly because of the critical mass of its 300,000 Tuscaloosa acres, and partly due to rumors that the Canadians have teamed up in a joint venture with a major oil company.

Devon Energy Corp. has nearly 290,000 acres and, with a well-heeled partner in Sinopec, awaits its turn on stage, which will feature a two-rig program in 2012.

Other players include privately held Indigo Minerals with 255,000 acres, and latecomer EOG Resources, the technological Gene Kelly, with more than 120,000 acres.

How much does EOG believe in the Tuscaloosa? It has partnered up with Mitsubishi in its first—and only—joint venture after a long solo career. EOG has permitted two wells to test an area on the western edge of the core high-resistivity zone.

The Tuscaloosa marine shale is easy to locate. It’s on the Louisiana/Mississippi border. It is age equivalent to the Eagle Ford shale in a geological system that parallels the modern shoreline of the Gulf of Mexico from Mexico to Mississippi.

Some of the best information on the Tuscaloosa can be found at Kirk Barrell’s Tuscaloosa Trend Blog. Barrell, founder of Amelia Resources LLC, has been active in the play for 22 years and has researched its early history.

In mid-May, while speaking at the third annual Hart DUO Conference & Exhibition in Denver, he suggested that activity was on the verge of a significant scale-up in second-half 2012 that will do much to define the Tuscaloosa’s potential.

“We know we don’t have the drilling costs where they need to be,” Barrell told DUO attendees. Those costs can exceed $14 million per well.

“The completions are right on par, but overall the play still needs to be economically proven and it will take years’ results from many wells to really determine the type curves and ultimate economics.”

The big plus for the Tuscaloosa involves the presence of several large, well-capitalized companies, many with prior experience in liquids-rich shales, that can draw upon institutional knowledge to shorten the learning curve.

Of the five wells that have published results, two drilled by Encana have generated more than 700 barrels of oil equivalent, comparing favorably to the best results from early tests in the Eagle Ford.

Most of the drilling is for delineation and science currently, though Encana clearly leads the pack. The company is using laterals lengths of up to 8,900 feet and 30 frac stages per well.

A string of successes with rising recoveries and falling well costs could telegraph an economic Tuscaloosa breakthrough within a year.

To date, the Tuscaloosa core grades well on all the standard unconventional metrics. The stratigraphic column indicates a highly laminated lithology.

And while operators fear a potentially ductile shale that bends but doesn’t break during fracture stimulation, early tests show intervals of sand and siltstone that create brittleness, sometimes augmented by a local fracture system.

The main dance partners all look good as they prepare for the 2012 Tuscaloosa Tango, where it’s “wait and see” as to who will dazzle a hopeful oil and gas audience.