May 27, 2012

Upswing in area horizontal oil drilling

Horizontal drilling activity is speeding up in Kansas.

Horizontal drilling activity is speeding up in Kansas.

Four companies that drill mainly horizontal oil wells filed 57 intent-to-drill notices with the Kansas Corporation Commission in the last 30 days.

That marks a continuation of the upswing in horizontal oil drilling activity that started in Kansas about nine months ago.

In the last month, SandRidge Energy of Oklahoma City filed 24 intent-to-drill notifications. Already active in Harper and Comanche counties, the company is extending into Gray, Hodgeman and Ford counties. The company has been the most active horizontal driller in the state over the last year.

It has accumulated hundreds of thousands of acres of mineral leases across southern and western Kansas.

Shell Oil, a latecomer to the oil play, is getting more active; it filed 22 notices in the last month.

“We are still in the exploration phase of a year to 18 months,” said spokesman Scott Scheffler.

In this phase, the company is still feeling out how much oil can be found and where it is precisely.

He wouldn’t say what results the company has seen from its wells, but it recently upped its rig count from three to four and is considering a fifth.

SandRidge Energy, in a May 3 presentation to analysts, said that it had peak 30-day averages of 423 barrels a day of oil equivalent in Barber County, 376 barrels a day in Harper County and 222 barrels a day in Comanche County.

SandRidge, which is ramping up to drill 120 wells this year, said the wells will produce an average of 456,000 barrels of oil equivalent per well over their lifetime, split evenly between oil and gas..

Other companies drilling horizontally in Kansas include Chesapeake Energy of Oklahoma City in Harper County, and Source Energy Midcon of Highlands Ranch, Colo., in Sumner County.

Horizontal drilling accounts for a fraction of the overall drilling in Kansas. There were 611 intent-to-drill filings in April alone, meaning that horizontal drilling remains less than 10 percent of the wells drilled. The vast majority are vertical oil wells drilled by Kansas-based producers.

What make horizontal wells significant is that they are larger, cost five to six times as much to drill and have the potential to produce significantly more oil.

Horizontal drilling remains more common in northern Oklahoma, where the target layer of oil-bearing rock, the Mississippian Limestone formation, is thicker. But analysts say the potential is greater in southern Kansas because the formation is larger there.

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