Back in 2008, near the height of the natural gas drilling boom in the Barnett Shale, more than 200 drilling rigs operated in the big North Texas field. With the collapse in natural gas prices this year, that number is down nearly 80 percent from its peak.
But not in the northwestern reaches of the field. In Montague, Jack and Wise counties, there is nearly as much drilling activity as in 2008, accounting for half the 48 rigs now in the Barnett.The reason? There's oil in them there hills, oil that simply doesn't exist in quantity in other parts of the Barnett. That's particularly true in Tarrant County, where the natural gas is "dry" -- with little liquid content.That's only half the story.During the first three months of this year, prodded by oil prices that had reached $100 a barrel, producers pumped just more than 19 million barrels of crude oil and condensate from the 24 counties that constitute the Barnett region, according to the Powell Shale Digest's review of Texas Railroad Commission data. (Condensate is a light liquid sometimes produced along with natural gas. It's worth about as much as oil.)About 8.3 million barrels, or 44 percent of that production, came from the Barnett. The other 10.8 million barrels came from other formations, mostly situated above the Barnett.At just over 52,000 barrels a day, the area's production is hardly in a league with the state's hottest new field, South Texas' Eagle Ford Shale, which just a few years after its discovery is producing nearly 200,000 barrels a day. But with the price of West Texas Intermediate crude oil still above $80 a barrel and natural gas prices depressed, it's enough to attract attention."It's kind of a miniboom in the oil boom," said Fort Worth producer Ray Richey, who has drilled several wells in Wise County this year and expects to drill a few more in the fall.It's more than "mini" for Montague County Commissioner Jon Kernek. His Precinct 1 covers the southern part of Montague County, where he says at least 90 percent of the drilling in the county is done.He feels that in his part of the county, drilling is as busy or busier than ever, including the 1980s boom after the 1979 Iranian revolution. Then, oil prices zoomed to record levels and sparked a U.S. drilling boom that didn't end until crude oil prices collapsed in 1986.As Kernek's comment illustrates, counties west of Tarrant have long had modest oil and gas production.For instance, one of the wells Richey drilled this year in Wise County is in an area where he said, "there are a few oil wells from the 1960s and '70s." His new well, which was drilled not into the Barnett but into a shallower oil formation, is making about 30 barrels of oil a day, roughly twice his expectation.Tarrant and Johnson counties are the top two gas producers in the Barnett, yet produce little oil or condensate.Producers seeking oil in the Barnett use the same techniques employed for gas -- horizontal drilling and fracturing. But wells drilled into shallower formations, while still fractured, are often drilled only vertically because the rock is not nearly as "tight" as the shale, Richey said.The combo playIn 2008, while natural gas was all the rage, Houston-based EOG Resources made a surprising announcement: It was going to look for crude oil in the Barnett, and it was willing to lock up more than 200,000 acres in Montague, Clay and Archer counties to do it.The wells, EOG said, could produce a combination of gas and oil. By the company's reckoning, the Barnett in the northwestern part of Wise County, a western sliver of Cooke County, and much of Montague and Jack counties is "oily."Last year, EOG drilled 269 Barnett combo wells, and it expects to drill 200 in 2012. (Those are "net" wells, which represent the company's ownership stake in wells that it might share with other producers.)The company declined to make a representative available for interviews, but according to investor presentations and other filings, EOG roughly doubled its liquids production in the Barnett last year to 37,700 barrels a day. That figure includes natural gas liquids -- valuable constituents of natural gas, like propane -- in addition to oil and condensate.Devon Energy, the largest producer in the Barnett, has recently also gone in search of oil and natural gas liquids in the Barnett. It is staying mostly in Wise County, the company's historical base in this area since its purchase of Mitchell Energy in 2001.Gregg Jacob, vice president of Devon's North Texas business unit, said gas in west and northwest Wise County "has a much higher liquids content" than reserves to the east. Wringing oil out of the shale still relies on horizontal drilling and fracturing, but getting the most out of wells in the oily areas also requires some fine-tuning, Jacob said.At first, Devon completed the wells in the oilier portion of the field much as it had completed wells elsewhere in the field. But then it completed four wells specifically to maximize liquids, he said.That included drilling the horizontal, or lateral, portion of the well, as much as 50 percent farther than usual, and doing more stages of hydraulic fracturing along the lateral, he said."It's more expensive, but so far we are pleased with the results," he said.Pioneer Natural Resources, based in Irving, has also boosted its activity in the Barnett area as it looks for oil and liquids. The company started drilling in Parker County in 2006 as part of the natural gas boom but changed strategy after prices fell sharply in 2008.Crude oil prices plunged at the same time but quickly rebounded."Oil prices started to increase, and we decided to move" into the oilier portion of the field, said Tim Dove, Pioneer's president and chief operating officer. "We were drilling some wells with Devon, and they made some pretty substantial liquids."By last year, Pioneer had leased about 80,000 net acres in Wise and Montague counties. Pioneer drilled nine wells in the area in the year's first three months and expects to keep two drilling rigs working in those counties this year, Dove said.Still a gas fieldIt's important to keep the Barnett's oil play in perspective. Pioneer is running about 60 rigs in the United States, including 12 in the Eagle Ford and 44 in the entire Permian Basin. So two rigs in the Barnett is hardly a company maker.But the presence of oil and natural gas liquids in parts of the field means drilling will remain more active than if there were only dry gas."At today's gas prices, if you don't have any liquids you don't get much" money for your product, said James Poston, CEO of Aruba Petroleum of Plano.Or, as Devon's Jacob put it, "you can add another couple of bucks to the value you get" for 1,000 cubic feet of natural gas when there is a high liquids content.And just as gas wells can also produce liquids, oil wells also produce gas."Even in Montague County, it's heavily oil, but all those wells also make gas," Poston said.According to the Powell Shale Digest, Montague County in the past 15 months ranked No. 6 in gas production in the Barnett, at nearly 50 billion cubic feet. That's dwarfed by leader Tarrant County's 951 billion cubic feet.In any event, the continued drilling prompted Devon to expand its Bridgeport gas processing plant again. The project, costing more than $150 million and aimed for completion early next year, will boost its capacity to 790 million cubic feet a day and will likely add about 45 jobs to the 410 there.Beyond the BarnettPerhaps the most intriguing element of the Barnett's oil play is the presence of those other producing formations. In much of the field, producers have generally drilled and completed wells in the shale, leaving other strata "behind the pipe," in industry parlance."Devon had 100 percent of our focus on the Barnett Shale. Now we're starting to map some of the zones above the Barnett," Jacob said. This year, he said, Devon plans to drill a couple of wells into the Caddo limestone formation, and it is also looking at oily portions of the Atoka and Strawn sandstones.Jim Fuquay, 817-390-7552Twitter: @jimfuquayHave more to add? News tip? Tell us
