Conasauga shale gas field

The Conasauga Shale is a geological gas shale formation lying within the Appalachian thrust and fault region of the state of Alabama and consisting of Lower Paleozoic (Cambrian and Ordovician) sedimentary rocks at an approximate 1,000 foot depth below the surface and ranging in depth from 2,000 to 9,000 feet. Due to the excessive thickness of the shale, the estimated gas reserves place the field as potentially one of the world’s largest natural gas fields.

Field history

* Discovery: 1980s
* Start of production: 2005
* Producing formations: Conasauga Shale

Geography of Conasauga Shale

The Conasauga sits on the exposed Knox formation as the more recent formations have eroded. The areas surrounding the exposed sections of the Conasauga consists of Middle Paleozoic (Silurian, Devonian, and Mississippian) sedimentary rocks as a primary layer before reaching the Conasauga as lies below.

The Conasauga Shale begins in Talladega County and continues in a northerly fashion to Calhoun, Cleburne, St. Clair, Etowah, Cherokee and DeKalb Counties and on into Northwest Georgia.(Ibid #1)

The Conasauga has one of the thickest shale sections in the world. Total organic content of the shale ranges from 0.5% to 1.5% that would ordinarily not be impressive except for the extraordinary thickness of the deposit. The Schlumberger Montage Shale log filed with the Alabama Oil and Gas Board calculates gas in place as 330.2 BCF per square mile of gas in place for every 4270 feet thickness of shale. This area has a unique subsidence and thrust zone under it that Dr. William Thomas, a notable geologist, has classified as a "Mushwad". (Ibid #1)

Phillip E. Meadows, licensed Petroleum Geologist and former member of the State of Alabama Oil and Gas Board, evaluated the Conasauga Shale as potentially the largest onshore natural gas field in the world with estimated reserves twice those of the South Pars field on the border of Iran and Qatar and 95-times the estimated reserves of the Barnett Shale. (Ibid #1)

The Conasauga Shale is known as a "tight" gas reservoir, similar to that of the Barnett Shale in Texas. The shale is very hard, and until technological advancements as have been honed in the exploration and drilling of the Barnett Shale, it was too costly to extract. While the Barnett Shale does not have adverse effects by the introduction of water during the drilling process, the Conasauga Shale is hydro-sensitive as the shale will absorb water, swell and thereby slow the flow of gas. Therefore, successful drilling of the Conasauga involves utilizing techniques minimizing water use and subsequent flow into the open-hole drilling techniques. Casing is normally used only until penetration into the Conasauga and then left open-hole so that multiple gas layers within the hole may flow for extraction.

History and well completion

The J.J. Young 34-2 #1 well in St. Clair County, Alabama (Alabama State Oil and Gas Board Permit No. 4325) was drilled as a joint venture between Amoco and Arco. This well was spudded on October 30, 1984. The well was initially drilled with air to approximately 2100’ when it encountered a significant quantity of gas that reportedly required closing the blowout preventer. The engineers for both Amoco and Arco said that the J. J. Young #1 would flow over one million cubic feet of gas per day (1,000 mcfgd). This well was plugged on February 16, 1985. It was discovered that Amoco did not have title to nine forties around the Young #1 well because the minerals had been severed in 1888. [#3]

During the late 1980’s Michigan Oil Co. (MOC) acquired 8,000 acres in this area. Before MOC could drill this prospect they were bought out by Pan-Oak Corp in 1991. They drilled the Young #2 well 150’ north of the #1 well in 1993. (Ibid #3) They drilled to a TD of 3,022’ and were unable to log this well. The driller reported that they had good gas shows. (Ibid #1)

Dominion

Red Hills Resources & Dominion Black Warrior Basin, Inc.In July 2002 Red Hills Resources started leasing in the Young #1 area. After acquiring approximately 9,000 acres, they put together the Big Canoe Prospect package which was offered to numerous potential industry partners. In late 2004 Red Hills sold 51% of this prospect to Dominion Black Warrior Basin Inc.

Dominion took over operations of this prospect and on March 8, 2005 spudded the Dawson 34-3 No.1 well located 970’ west of the Young #1 well. Ibid #3 After drilling out from under the surface pipe they encountered their first good gas kick at 2510’ which was flared to the pit. The second major gas show was encountered at 3510’ when the well exploded with a huge fire ball. (Ibid #1)

Later the next day while drilling at 5053’ the rig broke down and was down for approximately 30 hours. During this time the well was flared to the pit, at an estimated 750 to 1000 mcfgd with no apparent pressure draw down. When the drilling resumed it started to rain and within 3 hours the roaring gas flare slowed to a 15’ lazy flare. At 4:30 PM Saturday afternoon on March 19th the well encountered it’s third major gas show when it blew out at 5915’. The explosion of a 100’ plus fire ball was witnessed by numerous residents of the valley. (Ibid #1)

Energen

In January 2006 Energen Resources drilled the Williams 29-12 #1 well 10 miles southwest of the Dawson #1 well. (Ibid #3) Immediately after this well was drilled Energen and Dominion got into a bidding war for the remaining leases in north St. Clair County. (Ibid #1)

The Dominion Andrews 27-14 #3 well which was spudded April 20, 2006 and drilled to 3,412’ where the bit fell three feet and then the well blew out. The rig’s blowout preventers couldn’t handle the pressure. Dominion fought the well for three days during which the rig was at imminent risk of burning down. Dominion’s head Engineer testified at the Alabama Oil & Gas Board hearing (2/16/07) and said “We brought in world-class well control experts to control this well” and “The gas encountered presented a significant danger to the drilling rig, the personnel, and it had to be controlled”. When the opposing attorney asked this engineer how good was this well, the engineer said “To my knowledge we never put that gas through any type of meter”. When asked about pressure information for the well he responded they had none. (Ibid #1), (Ibid #3) This is not a true statement. After they got the well under control they bolted a three port manifold to the blowout preventer. (Ibid #1) It has been reported that the well’s shut in pressure was 1,835 psi. They opened up all three ports and the well blew for twelve hours at 1,755 psi flowing pressure with no pressure draw down. When they shut the well in, it went right back to 1,835 psi. The size of the ports were not reported however it was estimated that the well was flowing at 8 to 10 million cubic feet of gas per day. [#4] Dominion cemented the drill string in the hole by trying to hang cement at the top of the hole. The cement fell to the bottom of the hole sealing off the good gas zone. (Ibid #1), (Ibid #3)

The Oakes E23-11 #26 was permitted to a depth of 10,000’. The well was spudded on February 11, 2007. (Ibid #3) They set 2,032’ of 9 5/8” surface casing. They encountered an excellent gas filled fracture zone at approximately 7,600’.

This well is hooked up and selling gas. Late afternoon on 5/14/07 this well was flowing at 808mcfgd with a flowing tubing pressure of 3000 psi. All the surface equipment was covered in several inches of ice, indicating that some CO2 still remains in the gas. (Ibid #1)

The Burgess E28-11 #58 well while drilling (4/12/07) at 3500’ kicked so hard that they had to light the flare stack. Dominion prefers to vent the gas but is under orders from the State to flare the gas if it exceeds 300 mcfgd. The local residents said it had a 30’ vertical flare and roared like a train. On Saturday (4/14/07) while drilling at 5000’ the well blew out with a ball of fire that went over 100’ into the air. It rattled windows over a mile away. After everything settled down the vertical stack was burning a 50’ to 70’ flare. One report has the well flaring 500 mcfg for the first hour. They resumed drilling after 3 hours. They T.D. this well at 8500’ on 4/19/07.Ibid #1, (Ibid #3)

Energen Resources out of Birmingham, Alabama started buying leases in the St.Clair/Etowah County area in June of 2005. In February 2006 Energen drilled the Williams 19-12-101 well 10 miles southeast of the Dawson #1 well. (Ibid #3) In March 2006, Energen drilled the GAA 23-12 #1 well 9 miles NE of the Dawson #1 well. This well never reached T.D. due to deviation problems and was plugged. (Ibid #1), (Ibid #3)

Chesapeake Energy

Cheasapeake and Energen in joint venture: 100,000 gross acres for which Chesapeake reportedly paid $750 per acre for a purchase from Energy in addition to a commitment of $30 million for joint drilling and development. Chesapeake and Energen have a non-compete agreement in place whereby they share additional acreage positions as are acquired by either entity. [#5]

Highmount

Loews Corporation, controlled by the wealthy Tisch family, became a substantial leader in the Conasauga Shale in July of 2007 through the purchase of natural gas assets from Dominion (D). A portion of these purchased assets included all of Dominion Black Warrior Basin, Inc, holder of all Dominion's Conasauga Shale assets and a fully-owned subsidiary of Dominion (D). After closing on the purchase, Loews renamed Dominion's Alabama Operations to Highmount Exploration. (Ibid #9)

Northeast Alabama Gas District

Northeast Alabama Gas District’s territory covers Talladega, Calhoun and Cleburne Counties, less the areas inside municipal limits and one small area in the Southern part of Cleburne County currently served by another Gas District. The Gas District’s territorial limits begin 1 ½ miles outside of each incorporated municipality in these three counties and 1,000 feet from any municipal pipelines that extent outside the municipalities. [#6]

The Gas District is a public corporation in the State of Alabama. The District has granted an exclusive franchise for drilling, production and pipeline transportation for natural gas within its territory to a Special District created specifically for this purpose.Ibid #6 Owners of mineral rights within this territory desiring their natural gas reserves to be developed sign an agreement with the Gas District. Royalties provided by the District are equal to 20% of production and are higher than those reportedly being offered by the for-profit operators in surrounding areas. The Gas District has 5 charitable trusts for education, health care, social services, long-term care and economic development and job creation that receive a portion of the natural gas revenues to provide additional benefits for residents in the region. (Ibid #6)

Acreage Positions

Northeast Alabama Gas District: Provided an exclusive franchise for drilling, development and transportation of natural gas within its territory to sister organization Special District: 1,224,960 gross acres. (Ibid #6), [#7] ;

Cheasapeake and Energen in joint venture: 100,000 gross acres. (Ibid #4);

Energen (independent acreage): 126,000 acres (as of Feb. 2007) [#8] ;

Highmount Exploration: Unknown. The Conasauga acreage is a part of a larger purchase by Loews Corp. Corporation, owner of Highmount, from Dominion in 2007. [#9]

Major Development Participants in the Conasauga Shale

Highmount Exploration (Owned by Loews Corp. Corporation) Purchased from Dominion E&P assets)(Ibid #9)

Northeast Alabama Gas District (Public Utility Gas District)

Chesapeake Energy

See also

* Natural gas fields
* Energy in the United States
* Geology of Alabama
* Geology of the Appalachians

References

1. http://www.nealabamagas.com/conasauga_shale_geology_report , Phillip E. Meadows, Licensed Petroleum Geologist, “Conasauga Shale Report for Trustees of The Phillips Family Trusts”, Jun. 2007,

2. http://www.nationalatlas.gov, mapmaker, NE Alabama, Geologic Formations, Identify.

3. http://www.gsa.state.al.us, Alabama Oil and Gas Board, Well records.

4. Dan Chapman, The Atlanta Journal Constitution, “Natural Gas Fever Hits Alabama: A Peaceful Spot for a Gas Rush”, Jun. 10, 2007.

5. http://www.accessmylibrary.com/coms2/summary_0286-32942847_ITM, Article, Oil and Gas Investor, “Conasauga Saga”, Sept. 1, 2007, Referencing Alabama Oil and Gas Board Transcript, Feb. 16, 2007.

6. http://www.nealabamagas.com, Northeast Alabama Gas District.

# Calculations of acreage per county according to the following:
#* Cleburne County, Alabama
#* Talladega County, Alabama
#* Calhoun County, Alabama
# [http://www.stclairgas.com/html/birmingham.html Posted article, Russell Hubbard, News Staff Writer] , The Birmingham News, Feb 8, 2007
#. Monica M. Clark, Marketwatch, “Dominion Closes on Two Onshore E&P Sales for $6.5 Billion”, Jul. 31, 2007

External links

* [http://www.chk.com Chesapeake Energy]
* [http://www.energen.com Energen]
* [http://www.nealabamagas.com Northeast Alabama Gas District]
* [http://www.gsa.state.al.us Alabama Oil and Gas Board]