A recent study by the Wall Street research firm Bernstein Research on emerging western shale plays said Montana’s Heath play had very low potential.
But news from the primary participant in the tight oil play, Fidelity Exploration & Production Co., the E&P arm of MDU Resources, suggests that determination is premature.
Out of the five wells the company drilled in the central Montana play in 2012 all five are currently producing oil. Additionally, two are much better wells than recently reported by the Montana Board of Oil and Gas Conservation, which begs the question: Where did Bernstein get its well information?
We hope to have an answer to that question next week.
But given we could only find 11 modern horizontal wells drilled into the play, a determination of viability would seem premature.
Here’s the pertinent information we have assembled to date:
•The measured true depth of Fidelity’s five wells in Rosebud County ranges from 7,500 to 9,600 feet.
• The cost of Fidelity’s last well, 71 Ranch 44-1H, was about $4 million, considerably less than a comparable $8-12 million well in the prolific Middle Bakken of the Williston Basin. (Cost per Montana Board of Oil and Gas Conservation records and confirmed with Fidelity.)
•The initial production rates from Fidelity’s five wells, based on the usual 24-hour time period, as well as the average daily production during the first 30 days, are as follows:
—Schmidt 44-27H, first 24-hour IP on March 5, 2012, 447 barrels of oil; first 30 days of active production 258 barrels of oil per day.
—Kincheloe #11-23H, first 24-hour IP on July 12, 2012, 320 barrels; first 30-day average, taking out 3 days it was down, 48 bopd.
—Coffee 31-2H, first 24-hour IP on Aug. 16, 2012, 380 barrels; first 30-day average 65 bopd.
—Grebe 31-33H, first 24-hour IP, Aug. 30, 2012, 260 barrels; first 30-day average 69 bopd.
—71 Ranch 44-1H, first 24-hour IP, Oct. 16, 2012, 307 barrels; first 30-day average 75 bopd.
For an unknown reason, the Kincheloe and Grebe wells were not reported by the oil and gas board as completed until May of this year, with an IP of 2 and 1 barrels of oil, respectively. (Again, stay tuned.)
Cirque Resources LP has drilled four wells into the play, with the best and last also in Rosebud County — the Rock Happy 33-3H-2, a 9,510-foot well, with a 24-hour IP in April 2012 of 271 barrels of oil.
Norway’s largest oil company, Statoil, is Cirque’s partner in the play, which is in the evaluation stage by both companies. Cirque started drilling in 2011.
The third player is Central Montana Resources LLC, which drilled the first of several science wells in 2010, and at least two modern horizontal wells.
While the reported well results have not been stellar, that is not unusual in the infancy of exploiting a tight oil play. According to Lynn Helms, director of North Dakota’s Department of Minerals and Oil and Gas Division, “Things were very slow in the Bakken play for about two years until they cracked the code.”
Fidelity looking for a partner
Which is exactly what Patrick Rutty, vice president of exploration for Fidelity, is looking to do.
“It’s early days in the Heath,” he told Petroleum News Bakken May 29. “Our plan right now is obviously based on last year’s activities; we are evaluating the play, studying production and trying to understand well performance.”
Rutty called the well results to date “encouraging.”
Fidelity’s “main goal,” he said, “is to get more wells drilled … and advance our understanding of the play. … You need to drill enough wells to understand how to drill it, how best to complete it, and how to do so at a low cost.”
For that endeavor, the company is “actively seeking a partner.”
What kind of partner?
“We’re really pretty open,” Rutty said.
Currently Fidelity is trucking the oil it produces from its five wells.
“Until you get to a scale of operations up there, you would be trucking the oil” to market, he said when asked about infrastructure in the area.
The Heath, often referred to as a “shale play,” is actually similar to the Bakken in the Williston Basin in that it produces from dolomites and, to a lesser extent, tight limestone, Rutty said, with the source rock being adjacent shale.
Unlike the Bakken petroleum system, most of the Heath shale has not been a conventional reservoir target.
Heath shale, however, has been the source of more than 100 million barrels of oil to date from the area’s Tyler and Amsden conventional reservoirs, with about 95 million barrels of that from Tyler sandstone reservoir production via vertical wells.
More on the Heath play next week.
—Kay Cashman
