Lying below three long-inhabited areas in the northern hemisphere--northern Europe, Newfoundland, and central Louisana and Mississippi--are promising shale deposits that, up until recently, have been overlooked in favor of easier-to-access oil and gas reservoirs.

Attendees at Hart Energy’s DUO Conference & Exhibition in Denver were treated to a series of talks on these emerging plays. Each area offers tantalizing geology, but each also presents unique obstacles to development. In western Newfoundland, more capital and more exploration are needed to investigate the myriad possibilities; in the southern U.S. the Tuscaloosa target is interesting but quite deep; and in Europe potential is apparent but public attitudes discourage activity.

Newfoundland Shales

Western Newfoundland has interested explorers since the dawn of the oil industry. Oil seeps were first recorded at Parsons Pond in 1812 and roughly 6,000 barrels of oil were produced from dozens of primitive 10-barrel-a-day wells from 1893 to 1925. Now, firms including Canadian junior Deer Lake Oil & Gas are investigating the potential of the area with state-of-the-art techniques.

In the 1960s, shallow wells produced small quantities of oil. Modern seismic exploration began in 1991 on the west side of the Acadian-Alleghanian thrust and now more drilling is under way in the lacustrine ("lake bottom") and marine shales.

The Ordovician Green Point shale is currently being evaluated by Dragon Lance Management Corp. at its Shoal Point 3K-39 test. The deviated well was drilled on a spit protruding into Port au Port Bay. Spudded in January 2011, it is reported to have reached total depth of 5,724 feet, and indications are the operator plans to set casing to attempt a completion.

According to Cabot Martin, president of Deer Lake Oil & Gas, the organic-rich lacustrine shales in the Deer Lake Basin offer interesting targets as well. Current exploration efforts in the basin are looking at four potential reservoirs: the Pennsylvanian Howley formation and the Mississippian Rocky Brook, Saltwater Cove and 45 Brook formations.

In 2010, Deer Lake Oil & Gas completed the 1,460-foot #1 Werner Hatch exploratory test that targeted the Rocky Brook shale. "We found a 1,315-foot section of alternating, organically rich shales with a total organic content that ranged from 1% to 8.6%, a hydrocarbon index between 385 and 571, and porosity ranging from 6.9% to 18%," he said.

In addition, the well also tagged underlying conventional North Brook target from 1,443-60 feet and "demonstrated a dual conventional /unconventional play concept."

Deer Lake plans a second well, #1 Admirals Rise, to test the thermal maturity prognosis to the base of the Rocky Brook at 3,280 feet. "The #1 Admirals Rise is an unconventional test with stacked targets," said Martin.

"Deer Lake has spent the past five years preparing to be part of the shale revolution and has up to 200,000 acres of prospective land available."

Tuscaloosa Marine Shale

Running through central Louisiana and Mississippi, according to Michael Bodino of Global Hunter Securities, is an emerging Cretaceous oil resource play -- the Tuscaloosa marine shale--that covers 3.7 million acres and is similar to the Eagle Ford shale, albeit just slightly older. "The Tuscaloosa is basically where the Eagle Ford was three years ago in its evolution," he said.

The Tuscaloosa is as shallow as 10,000 feet and is 500- to more than 800-feet thick north to south across the play. The top of the Tuscaloosa appears to be shale, said Bodino, but cores from the lower part have been described as silty and sometimes calcareous, and have included shales and siltstones that contain oil and have some natural fracturing.

"The size of the prize is large, and oil-in-place estimates are in the range of 50- to 60 billion barrels."

The first TMS producer was drilled in 1975, #2 Cutere in Tangipahoa Parish, Louisiana. It flowed 2,550 barrels of oil before it was plugged and abandoned in 1981. A 1978 well, #1 Texas Pacific, was spudded in the same parish and produced 24,000 barrels of oil over an 18-year span. In 1982, a high-pressure blowout occurred during drilling at #1 Jackson 4-14 in Amite County, Mississippi. Several producers were drilled in 2009 including the first horizontal, #1 Braswell 24-12, that produced 12,700 barrels to date.

According to Bodino, there is plenty of existing data, thick hydrocarbon source rocks and high estimates of oil-in-place. But wells are deep (15,000-20,000 feet) and expensive, and unproven production rates create risky economics (average costs of approximately $10-$12 million per well). In addition, the rock properties are uncertain in terms of resistivity, permeability, and total organic content and there are water production issues.

"The completion recipe is unproven, as only a handful of wells in the play have been drilled horizontally and fractured with only a few stages," he said.

Some operators are assembling positions in the Tuscaloosa play, including Denbury Onshore (150,000 acres), Devon Energy (250,000 acres), Amelia Resources (110,000 acres) and Indigo II Louisiana Operating LLC (240,000 acres). The latter operator is currently drilling a horizontal well.

This year, Devon recently announced that it plans to drill two horizontal wells on recently acquired acreage east of East Feliciana Parish, the first of which is planned to have a 5,280-foot lateral with total depth of more than 20,000 feet and 15 fractured stages.

European Experience

Across the Atlantic Ocean into central Europe, there continues to be interest in developing the oil shale basins but according to Paul Favret, chief executive of Source Energy, "development will require patience, persistence and politics."

According to the Energy Information Agency (EIA), there is significant potential. Favret agrees but noted that Europe has a more complicated tectonic history and lower overall oil and gas production when compared to U.S. oil shale basins. In addition, the cost and service availabilities are challenging, the size of the reserves and unit well costs are not favorable and public and governmental perceptions of unconventional drilling and production techniques are very poor.

"The region hasn’t been very well developed when compared to the U.S. In Europe, there are less than 500 horizontal wells, 10-20 shale wells and only 6,000 square miles of 3-D seismic that have been shot." Comparable U.S. metrics are 10,000 horizontal wells, 12,000 shale wells and 40,000 square miles of 3-D seismic.

Favret also noted that there are only 58 drilling rigs on the European continent, low amounts of horsepower and only a few crews available for fracturing operations.

The political environment is also difficult. France's Parliament banned hydraulic fracturing in May 2011, in spite of strong potential in the oil-prone shales of the Paris Basin and some 180 trillion cubic feet (Tcf) of technically recoverable gas under French soil. Germany and Sweden also have moratoriums on unconventional drilling while they study hydraulic fracturing. The only European country with decent reserves (187 Tcf of technically recoverable shale gas) and a favorable political attitude is Poland.

But like the U.S., demand is high in Europe and it still outpaces supply. Yet, according to Favret, Europe seems willing to ignore the resource in spite of high fuel prices. In the U.S., the current average price per gallon of gasoline is $3.13, and in Europe, an equivalent amount costs more than $9.

Contact the author, Larry Prado, at lprado@hartenergy.com.