New Shale Play: Tuscaloosa Shale

Louisiana has long been an oil and gas producing state, having had prolific production onshore for about 100 years. And offshore, Louisiana leads the nation in oil and gas production. All of these oil and gas reservoirs are what we call conventional reservoirs, meaning the oil and gas is produced from porous and permeable or fractured sandstone, limestone or dolomite.

In the past few years, a new type of reservoir has come to the forefront -- unconventional. Primarily, these are source rock shales that heretofore were thought to be that and only that, a source rock that fed the conventional sandstone, limestone and dolomite reservoirs. But around 1980, George Mitchell of Mitchell Energy became convinced that the Barnette shale around Fort Worth, Texas held potential. He began experimenting, drilling many wells, spending a fortune, and not having much success. But, over about 20 years, he finally was able to crack the code and the Barnette shale became the first large-scale shale play in the world. And production soared, due to two technological achievements -- horizontal drilling and hydraulic fracturing.

The Barnette shale became the largest producing field in the USA and held that title until 2011, when the Haynesville shale took over the top spot. This shale play covers much of northwest Louisiana and east Texas. Well over 1,000 wells have been drilled and completed in the Haynesville shale. (The Barnette shale has over 14,000 producing oil and gas wells as of January, 2011.) The Haynesville shale boundaries are still being defined to the south and southwest, and development drilling is in the early stages.

Louisiana mineral rights owners and royalty owners are fortunate in that there is a new shale play experiencing widespread oil and gas leasing. It's called the Tuscaloosa shale (Tuscaloosa Marine shale by some) and stretches all the way across Louisiana in the central part of the state. (See Tuscaloosa shale map.) The Tuscaloosa shale is only a theory at this point, as drilling over the years has proved to be non-commercial. Yes, oil and gas are in the Tuscaloosa shale rock but getting it out profitably has been a no-go thus far.

There are several companies active in the Tuscaloosa shale. Devon Energy, Goodrich Petroleum, Amelia Resources, Indigo Minerals and Denbury Energy all have lease positions in the play. At least four wells have been announced for 2011 drilling.

The Tuscaloosa shale is almost the same geological age as the Eagle Ford shale of south Texas. It is slightly younger, but close to being the same "stratigraphic equivalent." The Eagle Ford shale stretches over 400 miles eastward from the border with Mexico, across South Texas to perhaps Sabine county. Thus far, the best production ends at Gonzales and Dewitt counties, but there is more exploration going on the east, towards the Louisiana border.

From there, we cross into Louisiana at southern Sabine parish and this might be the beginning of the Tuscaloosa shale. (We don't know yet!) The potential play goes all the way to into Mississippi. So, if the Eagle Ford shale and Tuscaloosa shale turn out to be productive relatively continuously in this "fairway," it will be a huge field, dare say the largest in U.S. history.

The Eagle Ford shale contains both oil and gas. It is thought that the Tuscaloosa shale will provide the same. In the past 30 years, prolific natural gas production has been discovered downdip in south Louisiana. So, theory is, oil production can be had (with modern technology) updip from the natural gas. This modern technology includes horizontal drilling, coupled to hydraulic fracturing.

Hydraulic fracturing is undergoing attack by environmental groups, claiming that it pollutes fresh water acquifers, causes earthquakes, and all kinds of claims. Yet, over 1 million "fracs" have been performed over several decades, with not one documented case of these claims. So, don't believe everything you read. Yes, the process should be regulated (and already is) but the Feds should stay out of this. The individual states can perform oversight just fine.

If one is a mineral rights owner in the Tuscaloosa shale, it could be their lucky day. This won't be known for a few years, as it will take many wells to "prove it up." But, oil and gas lease bonuses can come in handy, and if they do drill a well in a unit containing the mineral owner's mineral rights and royalty rights, royalty checks can ensue. And, as it happens in every oil and gas play ever discovered, some choose to sell mineral rights. Very few people have assets that they can sell when they "get in a jam" or need cash for any number of reasons. Selling mineral rights can be a solution for some. Plus, if the play gets hot, mineral rights can bring a healthy sum, and some choose not to pass up a big "guaranteed" cash payday. (See why sell mineral rights for more info on selling royalty rights.)

The announced development of the Tuscaloosa shale will be exciting to watch in 2011 and beyond. Here's to success, for Louisiana mineral rights owners!

If you seek professional help with oil and gas leasing matters or a sale of mineral rights, here is a Tuscaloosa shale oil and gas consultant you can have represent you.

Why Sell Mineral Rights

Many mineral rights owners face the question: Why sell mineral rights? Should you? Or not? This question has come up a lot in the past couple of years with the announce of another shale play. Here are a couple of important shale plays:

• Eagle Ford shale play
• Haynesville shale play

The Eagle Ford shale is in south Texas, in a broad area from Gonzales county to Webb county. A couple of years ago, Petrohawk brought it to the newsfront with announcement that drilling had paid off there and they were enthused about it. Since then, much oil and gas leasing activity has occurred and more drilling, as well. It appears that production is not as strong as in the Haynesville shale, but, it's still good. Here is more info: Eagle Ford shale.

And that means that mineral rights owners now face the first question listed above. Because any time an oil play or gas play is announced, mineral rights sales can bring big money.

There are many reasons one might want to sell all or part. But the main reason it's prudent to consider it is that cash money is a sure thing. And oil and gas exploration is anything but that. Over my 32 years in the oil and gas business, countless times, I have seen people reject an offer to sell that would have done them good, even made some wealthy, and then something went wrong and the offer went away. And they couldn't get much at all after that. Sometimes, zero. And that's pretty sad! I have seen people turn down million dollar paydays and a week later, they couldn't get a penny for the same property. Oil and gas is a fickle business and things change rapidly!

The Haynesville shale play (see Haynesville shale map) is one such play. Wow, a lot of good stories and sad stories, too! Some people got fortunes and some people lost them!

So, if you own mineral rights (which include royalty rights), it's wise to consider it. Follow the links on this page for more info.

Value Of Mineral Rights

There are many factors in a mineral rights valuation. There is no simple answer. For purposes of this blog, we will deal only with the value of oil and gas. If you have coal in your area, that's a another subject.

As for oil and gas, are your mineral rights in a region where oil and gas production has been found? If not, the value of your minerals is not very much at all. If you're minerals are in an oil or gas producing region, it could be substantial. In some areas where there is a shale play going on, you could reap a large payday, indeed. Mineral rights buyers such as Payday Minerals have paid out millions of dollars to some lucky mineral owners.

Another factor is whether you have an existing oil and gas lease on your property. And, if you are already receiving a royalty production check, that can affect value, in either direction. It's quite a complicated formula but the good news is that mineral owner doesn't have to figure it out. Here is one explanation of how to sell minerals.

Mineral rights buyers are gamblers. Oil and gas exploration is a very risky business and it's quite a roller coaster ride. If the price of crude oil and/or natural gas goes down, the income or potential income from mineral rights will go down, as well. So, other than cash, nothing is a sure thing. Companies who assemble a mineral rights or a royalties portfolio spread their risk by buying thousands of acres across many tracts. This way, if one goes bad, it doesn't hurt them so much.

And again, if your mineral rights are in one of the shale plays, such as the Haynesville shale, Eagle Ford shale, Colony Granite Wash, Niobrara shale, Marcellus shale, Fayetteville shale or Bakken shale, your minerals could be worth a small fortune, or a large fortune, depending on how many acres you have.

In future posts, other aspects will be covered. There is quite a lot to it!