Ward Lake Biggest Player

GAYLORD - A study of Otsego County's history as an oil and gas producing area reveals a contrast as stark as any to be found in the Michigan patch and possibly anywhere on the domestic petroleum scene.

It would be difficult to find two oil and gas plays that are as different as Otsego County's two mainstays, the elusive, yet prolific Niagaran pinnacle reefs and the shallow, but steady Antrim Shale. Major oil companies have dominated the exploration for and development of the county's portion of the Northern Niagaran Reef Trend, particularly in the play's early days, while independents appear to be the driving force behind the growing Antrim gas development.

It's really no contest in terms of which horizon has been more productive to date, with the Niagaran considered to be a rapidly maturing play already boasting some of the state's most prolific reservoirs, while numerous Antrim development projects are thought to have only scratched the surface of the late Devonian-aged strata's potential.

Production from each horizon was discovered long before it was to be successfully exploited on a wide-scale commercial basis. Antrim gas was first tapped by a 1940 discovery in Section 34 of Bagley Township (T30N, R3W), while the initial Niagaran oil strike in Michigan's Northern Reef Trend was drilled in 1951 in Section 15 of Chester Township (T29N, R2W).

The first Niagaran well was not a barnburner (it produced a total of only 2,752 barrels oil cumulatively) and was never successfully offset, but it did serve to tip the industry off to what would eventually be Michigan's all-time leading producing trend. Shell Oil Company found the first productive reef in the play's "modern" era, drilling the discovery of the Hayes 11-29N- 4W reservoir in 1969.

The discovery was followed by more than 50 reef finds in the next half-decade, many of them among the largest and most prolific ever drilled in Michigan. Through the first half of 1987, 25 of the reef reservoirs had produced more than a million barrels oil each, with 28 topping the two billion cubic feet mark in cumulative natural gas production. All-time leaders for the county in each category are Chester 18-30N-2W with more than 13 million barrels oil produced from 13 wells and the nearly 14 billion cubic feet gas from Chester, Sec. 15.

Both of the big reefs have taken on an added dimension, the Chester 18 Unit is the largest of seven Shell Western E & P secondary recovery projects (six fresh water water-floods and one recycled gas flood) and Chester, Sec. 15 is one of two depleted reefs being used for natural gas storage.

Two Niagaran reefs discovered since Michigan's Oil & Gas News profiled Otsego County in mid-1984 stand out among the 11 reef finds posted in the four year period. Terra Energy Ltd. opened Bagley 11-30N-3W in 1984, making over 650,000 barrels from three wells through last June. Significant in itself, the Bagley 11 discovery also helped unlock the secrets of a large reef complex extending down to Bagley 23-30N-3W, with Terra filling in the gaps by drilling several development wells.

PetroStar Energy's Chester 12-29N-2W discovery in 1985 has been the biggest gas producing reef to be brought in since 1984 with two wells nearing the three billion cubic feet mark in less than two years on line.

The potential for a reef find or a productive share of a known reef still provides the impetus for continued Niagaran exploration, but it's been the shallow Antrim Shale that has captured the imagination of many independents while drawing renewed attention to the central portion of Michigan's northern Lower Peninsula.

Having been on the scene since 1940, Antrim gas is not exactly a newcomer. But the pioneering work done in Bagley Township more than 40 years ago and in the mid-1960s by Murrell Welch did not kick off the type of plays that traditionally followed big Devonian strikes or the discovery of a new producing trend like the Trenton- Black River in Albion-Scipio-Pulaski or the northern Niagaran fairway.

Antrim Shale gas was not subjected to serious development efforts until the late 1970s when the North Michigan Land & Oil group got underway with projects in Otsego Lake and Chester (T30N, R2W) Townships.

Even the apparent success of the North Michigan developments did not prompt rapid or widespread development of Antrim gas, even though many of the needed conditions for economic development of the Antrim (a ready market, pipeline accessibility, etc.) seemed to be in place.

A combination of factors, more than any one in particular, are thought to be behind the play's upgrading to near-boom proportions in 1987, when more than 90 Antrim wells were drilled, most of them in Otsego County. Despite lower prices in a softer natural gas market, the players have been drawn by relatively low drilling costs to the shallow pay depths, availability of improved hydraulic fracturing technology necessary because of the tight nature of the shale and low economic risk, with a predictable payout period provided by the consistent, near uniform presence of Antrim gas in a large area.

The "Otsego County At A Glance" table tells only part of the story of the Antrim play. The all-time total of 2,660 wells drilled in the county is indeed impressive, but without a frame of reference for comparison it's merely an interesting number.

The February 1988 update of Otsego's petroleum history contained a tally of drilling completions through the end of 1984, at least two year's before the "modern" Antrim Shale play would really begin to roll. The lion's share of the 766 holes drilled to that date were attempts to find or develop Niagaran reef oil and gas reservoirs, still far and away the most prolific producing horizon in county or state history.

An even more lopsided proportion of drilling from 1985 to 1990 has been targeted to the Antrim, with the 1,894 completions recorded in that five-year period increasing Otsego County oil and gas well density from just over one well per square mile to nearly five wells per square mile.

While the intense drilling activity generated by numerous concurrent multiple well Antrim development projects in a county where the Antrim has generally been commercially productive to a greater or lesser extent almost anywhere you drilled for it has racked up big numbers in drilling statistic tabulations, the play's significance in terms of actual production has been harder to quantify.

Several factors have contributed to making it difficult to get a comprehensive picture of the horizon's productive capability.

Operators have continued a long-standing practice of not metering production from Antrim wells individually, typically running combined production from an entire project or unitized area through a common purchase meter, and in some cases even sharing purchase meters with Niagaran wells.

The unprecedented rush to drill, complete, equip and put Antrim wells on line in the past three years has seen Antrim wells and projects joining the productive pool on a continual basis, a pace which has until recently even outstripped state regulators' ability to account for their production output.

The latest officially available information on number of Antrim wells on line and at least capable of production was contained in the 1990 Department of Natural Resources Geological Survey Division Annual Well Summary, which showed 893 Antrim wells in 55 separate developments or projects on line as of the end of 1989. Work is currently underway to finalize the 1991 version of the Annual Well Summary, which should show a considerable increase in producible wells put on line in 1990.

The Annual Well Summary or "Brine Report" as it is sometimes referred to, does not report cumulative well production, instead listing information reported by operators on each wells' daily productive capability, thereby giving a fairly representative sample of what the Antrim horizon is capable of collectively in Otsego County.

As of the end of 1989, the 893 wells were reportedly capable of producing approximately 55.5 million cubic feet (Mmcf) gas daily, an average of 60 Mcf daily per well.

The Michigan Public Service Commission's Gas Division has instituted a computerized system to track Antrim Shale gas production, one which should provide comprehensive data for gas produced in the future, but to date, no cumulative figures on overall Antrim gas production are available.

What operators, competing developers and those speculating on leases in potentially productive areas have had to rely on for the most part is what is referred to as "anecdotal data", or information passed by word of mouth and not necessarily officially recorded or a matter of public record.

In recent months, the unofficial reports are that Antrim Shale wells utilizing new drilling and completion methods have had highly positive if not consistent results, with wells reported or rumored in some cases to be producing from 500 to 750 Mcf gas daily.

Tested first was the "waterless" completion method, or the simultaneous production of Antrim gas and disposal of produced Antrim water into the Dundee in the same wellbore. That technique makes use of gravity to separate gas and water in the wellbore, with the water falling to the disposal zone and gas flowing to surface in an ideal situation.

A more recent method reportedly in use in several Otsego wells utilizes the same wellbore separation of produced gas and water, but instead of attempting to dispose of the water in a deeper horizon, allows it to fall into a several hundred foot deep "sump", from which it is pumped to surface by a Moyno-type pump and disposed of by conventional means.

Success with either method is believed to be tied to a lowering of bottom hole pressure at the face of the Antrim Shale producing interval, facilitated by the gravity wellbore separation. The waterless technique has been successful in some cases, with dewatering of the wells aided by production and disposal of large volumes of water when pressures and conditions in the disposal zones are conducive.

Initial test rates of 200 to 300 Mcf and more have been reported for wells using the waterless technique, but projects with several waterless wells have also included numerous "dog" wells, or poor producers also, making no more than conventionally drilled or completed wells.

The higher rates of 500 Mcf daily per well or more are said to have been achieved in the wells drilled several hundred feet into the Traverse, with produced water gravity separated and pumped to surface from the sump. Again the information is anecdotal in nature, but reliable reports indicate the high gas production rates possible with the technique are achieved almost immediately upon commencement of production, and do not depend on a period of dewatering for the well.

Taking a look at where the 'heaviest recent concentration of Antrim Shale development activity has been in Otsego County, drilling tallies for 1989 and 1990 compiled by Michigan Oil & Gas News show that more than one-third (480) of the 1,335 drilling completions recorded over the two-year period have been in "Central" Charlton (T30N-R1W) and "North" Chester (T30N-R2W) townships. Also logging significant numbers were: "South" Charlton (177 completions), Otsego Lake (159) and Bagley (121).

Drilled least have been the "31 North" and "32 North" tiers of townships, with only 13 percent of 1989 and 1990 drilling taking place in "North" Charlton, Dover, Livingston and Elmira townships and no drilling at all in "triple-wide" Corwith Township, 32N-R1-3W, where the Antrim subcrops.

Most active operators over the past two years have been Ward Lake Drilling with 310 Antrim Shale completions; Muskegon Development Company with 232 (including 192 in 1990 alone) and Terra Energy LTD with 197. For a more complete rundown of "who drilled where" in Otsego County's Antrim Shale development in 1989 and 1990, see tables in statistical drilling summaries for 1989 and 1990 in the January 1990 and 1991 Monthly Report issues of Michigan Oil & Gas News.

Niagaran reefs still rule Otsego County from a cumulative production standpoint and undoubtedly will for a long time to come despite the recent onslaught of Antrim activity.Nearly all the 87 million barrels oil and almost 200 billion cubic feet gas produced in the county through the end of 1989 came from Niagaran reservoirs, which were not developed in earnest until the early 1970s, although one productive reef was discovered in Section 15 of "South" Chester Township in 1951.

Only a handful of reef discoveries have been made since the county's petroleum history was last updated here in 1988. Best of the new batch have been: Louisiana Land & Exploration Co.'s State Chester 1-5 in "South" Chester; Don Yohe Enterprises Incorporated's El Mac Hills #2 1-19 in "North" Charlton and Shell Western E & P Inc.'s basinward sourgas and condensate discovery, the State Chester 1-28 in "South" Chester.

The big Chester 18 (30N-2W) reservoir is not likely to ever be challenged as the county's best all-time oil producer with more than 13.6 million barrels produced through 1989, more than 5.5 million of it on secondary recovery.

Continued strong production in the past several years has made the Charlton 31-30N-1W gas-condensate reservoir Otsego's all-time gas leader, with more than 14 billion cubic feet produced through 1989 to surpass long-time leader Chester (29N-2W), Sec. 15, now utilized for gas storage, which had made just short of 14 Bcf in its 10 years on production.

Top oil producing reef in the 1987 to 1989 period in Otsego was a close contest between the three-well Bagley 11 Field with approximately 652,000 barrels; Corwith 31, whose two wells made 643,000 of their cumulative total of 1.5 million in that period and Chester 18, in a steady decline, but still making 636,000 from 1987 to 1989.

Chester 12-29N-2W came on as the best gas producing reef from 1987 to 1989, with the two-well reservoir discovered in 1986 making almost 7.5 Bcf in just three years. Also showing strongly in the latest three years for which production data is available were Charlton 11-31N-1W with 2.3 Bcf; Corwith 12-32N-1W with 1.8 Bcf and again, Chester 18 with 1.7 Bcf.

Charlton 11-31N-1W's lone well. Shell Western's State-N Charlton 1-11 (SW SE SE, Sec 11, T31N, R1W, Charlton Township), a 1977 Pigeon River Country State Forest area discovery put on line in 1981, may be the best individual gas well ever drilled in Otsego County, having made nearly 10 Bcf all by itself.

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