by J.B. Bird and Marc Airhart
August, 2008

In 2006, when independent operators found new natural gas plays in the Matagorda Bay area of the Texas Gulf Coast, estimates showed a reserve potential of 33 billion cubic feet (Bcf)—a quantity that was economically meaningful to operators and shareholders, but modest for Texas consumers, who on average burn up that much natural gas in three and a half days.

But the new find had a significance that went beyond its size. It was another of the successful discoveries that take place each year in regions of Texas that have already been heavily explored. Discoveries like the one in Matagorda Bay prove again the commercial viability of seeking the vast stores of oil and natural gas that remain in place but undeveloped in Texas.

A significant amount of the remaining mobile oil and gas in Texas resides on state lands. Based on estimates, 1.6 billion barrels (Bbl) of mobile oil and 10 trillion cubic feet (Tcf) of gas remain to be recovered on state lands—that’s the same amount of gas, and almost as much oil, as has been produced to-date in these “played out” properties.

Thanks to the Republic of Texas’s decision in 1839 to set aside state lands for the benefit of public schools, income from these reserves aids Texans immensely. Royalties and severance taxes on more than 13 million acres go to the state’s Permanent School Fund. Based on current prices, the state could earn $67.5 billion from the recovery of the remaining oil and gas on its public lands.

It’s not easy to hit pay dirt in heavily explored and exploited lands, but Texas operators have a major leg up thanks to researchers in the Bureau of Economic Geology’s State of Texas Advanced Resources Recovery project (STARR). Each year, STARR scientists help operators explore new discoveries and target known but hard to access reserves in previously explored fields. At the same time, through workshops and peer-reviewed publications, STARR scientists promote geological concepts that encourage exploration of mature fields and unconventional resources.

STARR fills an especially important gap for smaller operators, who happen to do most of the exploration on state lands.

“We work mainly with small companies that don’t have research labs,” says Bob Loucks, STARR’s former principal investigator (PI) and presently head of the project’s work in unconventional resources.

“Many industry geoscientists don’t have the time to stay up to date on stratigraphic concepts and methods, such as sequence stratigraphy,” says Loucks. “We can work with our industry partners to apply stratigraphic and structural methods that they don’t have the background or time to use.” “A lot of the areas where our operators work were abandoned by the majors,” adds Ursula Hammes, STARR’s lead PI. “Sometimes these wells make just a few barrels a day, or maybe they make a billion cubic feet at most of gas.” For smaller companies, that can be enough to turn a profit, especially at today’s prices. And the accumulation of work by smaller operators ultimately yields large payouts for the state’s public schools.

Ursula Hammes

Finding “New” Hydrocarbons

About a dozen researchers at the Bureau of Economic Geology work with STARR at any given time, an interdisciplinary team of geologists, geophysicists, petrophysicists and engineers. Most have industry experience. “Our experience and background makes us a perfect fit for small companies,” says Loucks. “Our industry experience allows us to communicate with them and to know their needs, as we have been there before.” At the same time, because STARR researchers work in a highly collaborative academic setting, they often bring new exploration concepts to bear on their clients’ projects.

Bob Loucks

The discoveries in the Matagorda Bay area were one example. Reviewing data on the exploration zone, Hammes suggested operators drill deeper to target slope and basin-floor fans. She knew from experience and research that similar slope and basin-floor fans had signaled discoveries in deep-water sediments in the Gulf of Mexico and off West Africa. In the Matagorda Bay area, a few wells had been drilled into the fans before but had not been judged economical.

As the operators acknowledged in a letter of support to the Texas State Legislature, Hammes’ insights helped encourage the firm to develop several producing wells.

Hammes is careful to point out that STARR researchers do not work as consultants. They help with background work and leads but do not work up prospects, which is the responsibility of the operator (or their paid consultants). “But we fill an important gap, working with smaller operators—some are two person shops—that don’t always have the resources to do background research,” she says.

Encouraging Drilling

STARR’s reservoir characterization work has yielded great results. Since the program’s start 13 years ago, STARR research has led to more than 400 infill wells and 85 recompletions. The program is required to be revenue neutral, generating funds equal to or exceeding its $1.5 million annual appropriation from the State Legislature. STARR consistently beats this mark, helping generate revenues anywhere from eight to 27 times its appropriation.

While reservoir characterization often aids individual discoveries, STARR researchers have found important ways to aid the Texas hydrocarbon industry as a whole. In recent years, STARR has attracted attention for regional studies and groundbreaking research in unconventional resources.

The Barnett Shale has been an especially popular subject. Three sold-out workshops around the state established STARR as an important research center on shale-gas plays.

The workshops highlighted research original to STARR. The study of fractures in the Barnett started in the FRAC Research Consortium at the Bureau with Julia Gale as a key researcher. When Gale joined the STARR group, her continued efforts led to a suite of publications and numerous lectures.

“She is now recognized as an expert on Barnett shale-gas play fractures,” says Loucks.

Loucks’ research along with Rob Reed and Steve Ruppel on nanopores in the Barnett has been just as noteworthy. The Bureau is the only entity (academic, government, or industry) imaging nano-scale porosity in the Barnett Shale. As a result, Loucks and colleagues have opened up new concepts relative to storage, reservoir-quality distribution, and permeability pathways in the Barnett.

“We caught even some of the large research labs off guard with this discovery and this has changed the way they are now thinking about shale-gas reservoirs,” says Loucks. “We feel really good about this because we have promoted a new concept that others find valuable enough to invest their research money into.” Research into the East Texas Woodbine reservoir stratigraphic architecture by Bill Ambrose, Fred Wang, Tucker Hentz, Flo Bonnaffe, and Bob Loucks has been another highlight, yielding public presentations encouraging new development. “The first principle of finding oil is that you have to drill,” says Loucks. “Our regional and unconventional energy studies can encourage this drilling.”

Bill Ambrose

Research Environment

STARR, Hammes and Loucks emphasize, is a team effort that relies on contributions from corporate partners and many researchers at the Bureau.

When industry partners authorize release of data, Bureau colleagues can share important aspects of their discoveries with other geologists. This has led to dozens of peer-reviewed and industry publications.

“We see a lot of seismic data that is generally not available to academia,” says Loucks. “From these data we can help the company find hydrocarbons and at the same time learn new principles about stratigraphy.”

Research on the sequence stratigraphy of the Texas Tertiary sandstones, for example, “is being applied to other Gulf of Mexico areas as well as to other areas of the world,” says Loucks.
 
As a former geologist with Anadarko Petroleum Corp., Hammes appreciates the opportunity to conduct applied research that can influence general concepts.

Loucks, who worked in energy exploration for 20 years, is motivated by the chance to apply research concepts to actual projects: “We get to work on real data and find out in the end whether our ideas work. This means did we find hydrocarbons or did we find a dry hole.”

And when STARR researchers help operators find hydrocarbons, the entire state benefits.

To learn more about Project STARR, visit their website at http://www.beg.utexas.edu/starr/