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Anadarko Basin

Anadarko Basin

The Anadarko Basin extends more than 50,000 square miles of West-Central Oklahoma and the Texas Panhandle.

It includes some of the most prolific – and deepest – natural gas reserves in the United States.

It is a geologic depositional and structural basin centered in the western part of the state of Oklahoma and the Texas Panhandle, and extending into southwestern Kansas and southeastern Colorado.

By the end of the 20th Century, the Anadarko Basin was producing the largest amount of natural gas in the United States.

Notable oil and gas fields within the basin include the Hugoton-Panhandle Gas Field, West Edmond Field, Union City Field and the Elk City Field. The basin is also the only commercial source of iodine in the United States and a major producer of helium.

With its proximity to the trading and distribution hub in Cushing, growth is anticipated. Lower transportation costs could result in higher profits, prompting drillers to explore for more oil and gas in a low-price environment.

The basin holds one of the most prolific natural gas reserves in North America, with ultimate gas production in excess of 100 trillion cubic feet (2,800 km3) of gas.

The U.S. Geological Survey estimated that the Anadarko Basin held 27.5 trillion cubic feet of natural gas and 410 million barrels of natural gas liquids (NGL). The U.S. Geological Survey has also estimated that the Anadarko Basin held 495 million barrels of oil.

Geology

The Anadarko basin is productive from a multitude of formations, including, Tonkawa, Cottage Grove, Oswego, Red Fork, Morrow/Springer, Chester, Mississippian, Hunton/Woodford, Granite. The plays are structural, stratigraphic, post-depositional and combinations of everything.

The Anadarko is a giant geologic puzzle that shows itself one borehole at a time and usually has a surprise or two along the way. It is important for the geologist to understand the pre-depositional topology, depositional regimes, post depositional factors including hydrocarbon source, hydrocarbon migration, water migration, clay mineralogy and a host of other factors.

The Anadarko basin is one of the deepest basins in North America with about 40,000 feet of sediment at its deepest point. It is bounded on the south by the Wichita Mountains and the Amarillo Uplift, on the southeast by the Arbuckle Mountains and the Ardmore basin, on the east by the Nemaha uplift and the north by the Central Kansas Uplift and to the northwest by the Las Animas Arch.

The basin has a particularly thick section of Pennsylvanian rocks which is a prolific oil and gas producer. The basic northwest trend of the Anadarko feature is at least as old as Middle Proterozoic (about 1.4 billion years ago).

From the Middle Proterozoic until the Mississippian the Anadarko basin (and much of the southern mid-continent) was inundated by a broad continental sea. During that time thick sequences of limestones, sandstones and organic rich shales were laid down in the Anadarko.

In the Mississippian – Permian time the Wichita and Arbuckle Mountains were uplifted resulting in thrust faults that have up to 40,000 feet of displacement.

This essentially defined the basin morphology as it today. There are 3 interesting formations now being played in the Anadarko – the Woodford shale, Mississippian Lime and the Morrow/Springer Shale.

Woodford Shale

The Woodford is a rich organic black shale that is late Devonian and early Mississippian in age. It has been widely regarded as a major hydrocarbon source rock for the basin.

If you divide it into the lower, middle and upper, the upper thickens to the northeast towards Kansas and the lower and middle thicken to the southwest into the center part of the basin. The three units also have TOC which is unique to their deposition.

The Woodford was laid down on a regional unconformity that occurred in the late Devonian and is overlain conformably by limestones and shales of early Mississippian in age. Woodford ranges from 0 feet in thickness on the upper shelf to about 900 feet thick in the deep part of the basin.

Springer Shale

The Springer shale is above the Woodford and is Mississippian in age. Unlike the Woodford the Springer is actually a mix of sandstone and shale (there are other “shales” currently under development that are also mixed with sandstone or limestone and are probably not technically a shale).

As a result of it’s composition it is estimated that the Springer will have higher porosity and permeability than a typical shale play. The industry is also hopeful that as a result, it won’t have the typical sharp production decline curve that is typical with a shale. Time will tell if the industry hopefuls are correct.

The other interesting thing about the Springer is that many believe its source of hydrocarbons comes from the Woodford.

Mississippian Lime

The Mississippian Lime has been a petroleum target in the Anadarko for a very long time (since the 1940’s). I seem to recall drilling at least one well into this tight limestone back in the early 1980’s.

It never seemed to produce well but if you were looking for a bailout zone, the Mississippian Lime was definitely the place to look. Today, with horizontal technology it can be produced economically as the target formation.

It produces water which needs to be disposed of but the drilling costs are substantially cheaper than an Eagle Ford or Bakken well.

The wells are shallower and because the lime is porous and easier to drill they are often less than half the cost of a conventional shale well ($3-$4 million versus $8-$10 million).

History

Beginning in the late 1950s, when technological advances allowed it, Anadarko Basin wells in Oklahoma began to be drilled more than two miles deep in search of highly pressurized natural gas zones.

By the 1960s, a few companies began risking millions of dollars and pushing rotary rig drilling technology to reach beyond the 13,000-foot level in what geologists called “the deep gas play.” Although most experts disagreed, Robert Hefner III believed immense natural gas reserves resided even deeper, three miles or more.

Hefner and other independent producers formed GHK (Glover-Hefner-Kennedy) Company, Oklahoma City, to drill expensive, ultra-deep wells into the heart of the Anadarko Basin.

The first attempt began in 1967 and took two years to reach what at the time was a record depth, 24,473 feet. The well found plenty of natural gas, according to historian Robert Dorman, “but because of price controls, the sale of the gas could not cover the high cost of drilling so deeply – $6.5 million, as opposed to a few hundred thousand dollars for a conventional well.”

Undeterred and “in hopes that the economic equation would change,” Hefner drilled another ultra-deep well, Dorman notes. In 1972, the Baden No. 1 well near Elk City, Oklahoma, set a new world-record depth of 30,050. The steel pipe alone that went into the well weighed more than 1.2 million pounds.

Drilling at such great depths required new technologies – and big rigs. “Hefner and his associates learned a good deal from the Baden well, which they proceeded to apply to their next, most renowned project: Bertha Rogers No. 1,” Dorman explains in the 2006 book, It Happened in Oklahoma. “Bertha Rogers pushed the technology envelope even further.”

Using specially designed extra-wide pipe, GHK and partner Lone Star Producing Company began drilling in November 1972, averaging about 60 feet per day. A string of 14-inch diameter casing weighing in excess of 106 pounds per foot was cemented in the well at 14,198 feet.

The 1.3 million pounds of casing was the heaviest ever handled by any drilling rig in the history of the industry.

On April 13, 1974, Bertha Rogers No. 1 reached a total depth of 31,441 feet – where it encountered liquid sulfur. According to Lone Star Producing Company, the bottom hole pressure and temperature were an estimated 24,850 pounds per square inch and 475 degrees Fahrenheit respectively.

It required about eight hours for bottom hole cuttings to reach the surface almost six miles above.

“It was the deepest hole in the world until it was surpassed by a well in the Soviet Union several years later,” Dorman reports. “Even so, Bertha Rogers reigned as the deepest well in the United States for three decades, finally exceeded in 2004.”

Drilling strained the giant rig’s equipment to the limit. Because of dangerous downhole conditions, including corrosive pockets of hydrogen sulfide, Dorman adds that the historic Oklahoma well had to be completed at a shallower depth.

Although no gas was produced at its record depth, the well was successfully competed as a natural gas discovery at 13,000 feet. “Like its predecessors, the Bertha Rogers as a business venture was a losing proposition,” he notes. “It cost $7 million but yielded relatively little gas. Some observers classified it as an ultra-deep dry hole.”

Hefner’s belief in the deep Anadarko Basin would prove true as drilling technologies improved by the 1990s. Decreases in drilling times by as much as two-thirds helped contain costs.

By 2002, Oklahoma’s deep wells had produced more than six trillion cubic feet of natural gas – with trillions more yet to be found. In 2004, gas passed oil to become the state’s most valuable energy commodity.

In 1969, Parker Drilling Company signed a contract with the U.S. Atomic Energy Commission to drill a series of holes up to 120 inches in diameter and 6,500 feet in depth in Alaska and Nevada for nuclear bomb tests.

Parker Drilling’s Rig No. 114 was one of three special rigs built to drill the atomic wells. It was later modified to drill conventional wells at record-breaking depths some reaching four miles deep.

After retiring Rig No. 114 from service, Parker Drilling loaned the giant to Elk City, Oklahoma, as an energy education exhibit next to the Anadarko Museum of Natural History.

The over-pressured gas plays in the Anadarko basin are just one of the small items that has made the Oklahoma oil field the legend that it is today. The western Anadarko basin wasn’t really the prime oil and gas area of Oklahoma until the boom in the 1970’s.

Oil production was higher on the shelf in eastern Oklahoma and extended to the central part of Oklahoma.

Current activity

For the first time, the U.S. Energy Information Administration (EIA) recognized the Anadarko Basin is a heavyweight among U.S. shale regions in terms of oil and natural gas production.

While already a well-established oil and natural gas producing basin, the implementation of improved drilling and development techniques has brought the Anadarko new life – and increased attention from producers nationwide.

In fact, the region’s current active rig count of 129 is behind only the Permian, with the Anadarko sitting among the top most productive oil and gas regions based on EIA data.

Moreover, this surge in activity and production has coincided with a steep uptick in drilling efficiency. According oil and gas consulting firm EnerCom’s Effective Rig Count – a measure of drilling efficiency which compares current production per active rig.

A majority of the activity within the Anadarko Basin is centered on the SCOOP (South Central Oklahoma Oil Province) and STACK (Sooner Trend Anadarko Canadian and Kingfisher) plays of Oklahoma, collectively estimated to be valued at over $40 billion.

The STACK specifically is a main focus for producers in the areas, as oil and gas research firm IHS Markit points out, the STACK is in its “early development” with significant potential based on the productivity seen so far.

It is estimated that break-even point – the price per barrel at which development makes economic sense – for the top producing wells in the STACK is competitive with top Permian plays.

These wells are estimated to break even “under $30 a barrel,” according to HIS – an astonishingly low, which is indicative of the rich resources found in the play.

While the inclusion of the Anadarko Basin in EIA’s drilling report is not hugely impactful in and of itself, what this move denotes is significant. Its inclusion not only signifies recognition of the Anadarko as a top shale basin nationally, but also the immense economic opportunity that continued development in this region represents.

The drilling activity in Oklahoma’s STACK and SCOOP oil plays has increased so much in the past 7 months, the Anadarko Region’s rate of increase is second only to the Permian Region so far this year.

The Anadarko was recently added to the Energy Information Administration’s Drilling Productivity Report. The EIA said the region accounted for 437,000 barrels a day of crude oil production as well as 4.9 billion cubic feet a day of natural gas production in July 2017.

The increase was largely due to more exploration as the Anadarko Region went from 84 oil and gas rigs in January to 129 in July. the region’s production accounted for 13% of all new wells drilled nationally in July 2017.

It also means the expanded Drilling Productivity Report issued by the EIA covers nearly 87% of all active onshore rigs in the entire country.
The Anadarko’s new-well production per rig totaled 372 barrels of oil a day compared to the Permian’s average production of 609 b/d and the Bakken’s production of 1,166 b/d. But the EIA anticipates the production to grow in the Anadarko Region.