The Discovery Group

What is net pay?

How we might re-assess the productive
potential of tight carbonate reservoirs
in the Illinois basin

Bob Cluff
The Discovery Group Inc., Denver, Colorado
SIPES Denver monthly luncheon
August 2015

www.Discovery-Group.com
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Outline

• Short summary of the Illinois basin and history

of carbonate reservoir exploration
• Review the Griffin bottoms activity from 2006-
2015
• What are the options for explaining the high
productivity of these low porosity wells?
• How can we better define “net pay” and map it
to identify opportunities?
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Illinois basin geology 101

• Interior cratonic basin, most similar to the Williston basin in
comparison to Rockies/Midcontinent geology
– No salt in the section, only very thin anhydrites
– Open marine to the south through most of Paleozoic
• First production in early 1900’s, with a major drilling boom
just before and during WWII.
• About 4 billion barrels of oil produced to date, mostly from
Pennsylvanian and Mississippian reservoirs
– Also Devonian, Silurian, and Ordovician reservoirs but the fields are
generally small and are not material in the big picture
• Main source rock is the New Albany Shale, equivalent to the
Bakken or Woodford
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Mast & Howard, 1990, AAPG Mem 51

1900…………………………1937……………..1960’s………..1986

Howard, 1990, AAPG Mem 51

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Focus since 1970

Most of 4 billion bbls since 1937

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Illinois basin geology 102

• Long period of slow decline beginning in the early 1950’s as
no new giant fields were discovered
• “Independents land” – the majors sold their holdings outside
the giants by 1970, and divested those in the late 1980’s and
1990’s low price world
• Mostly small, locally based operators
– Quite a few Texas, Oklahoma, and Colorado companies “dabble” in
the basin but few have established a long term presence
• Starting about 1973, drilling focus shifted to “deeper” Middle
Mississippian carbonates below 3300 ft
– St Louis Limestone, Salem Limestone, “Warsaw” Limestone are the
primary targets
– Mostly carbonate grainstone reservoirs with preserved primary
porosity
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Middle Mississippian oil fields

Includes Ste Genevieve Ls,
St. Louis Ls,
Salem Ls,
and “Warsaw” Ls

Barrows & Cluff, 1984, AAPG Mem 35

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Map of Salem-
Warsaw fields

9 township project area

on Illinois-Indiana border,
mostly in Gibson Co, IN

Howard, 1990, AAPG Mem 51

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11,600 total wells in the area

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4071 wells drilled post-1975

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1071+ Salem-Warsaw tests

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St Louis-Salem-Warsaw producers

Phillipstown,
1982-1984 Griffin Consolidated or
“Griffin bottoms”, 2008-2015

New Harmony,
mostly 1990’s

New Harmony,
1978-2001
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New activity: ~80 producing wells,

+/- 50 permits or active locs
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Top of Barlow Ls structure

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Citation/Amanta Maier
Rex/Cooper leases

Rex/Dunn

TC Cooper H-1
horizontal test (2013)

Citation/Bozeman Land
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Summary production plot

“Typical” Salem-Warsaw wells make 10-20 MBO

30% De
72 PRODUCING WELLS
3.87 MMboe EUR
~54,000 bbls/well
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500 ft gross perforated zone

Upper Salem interval

Middle Salem interval

Lower Salem + Warsaw interval

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How can we explain the high productivity

of these wells?
• Rex & Citation wells are making 2-4X the background
productivity of Salem-Warsaw completions from the 1973-
2007 timeframe in this same area
• Two explanations that I can see:
– High volume fracs reach out to contact nearby, but disconnected
lenses of high porosity conventional pay
– High volume fracs create a high surface area region around the well
with low porosity pay, increasing the net So*φ*h drained by a well
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“Reach out and touch someone…….”

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New Harmony field > 7%

3% < x < 7%

Hallau, PTTC 2014 presentation

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> 7%

Griffin Consolidated 3% < x < 7%

Hallau, PTTC 2014 presentation

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• Play works
because
carbonate sands
are small,
lenticular bodies
• When we frac a
well, we reach out
and touch the
neighbor lenses
• Traditional pay
cutoffs might still
apply

NASA image, Eluthera area, Bahamas

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Reach out and touch someone

• We want to look for areas with lots of thin, areally small
conventional pay reservoir in fog of low porosity rocks
• Fracs should be optimized for “L” (length)
– Simple geometry, reaching out as far as possible
• Horizontal wells would be drilled to cross as many small
shoals as possible (depositional trend bias)
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Fracs maximize length to reach nearby high porosity

grainstone reservoirs
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Limbo, or how low can you go?

• Experience in other basins says light oil can be produced from
low porosity siltstones and carbonates
• A lot of oil.
• But, we have to honor the petrophysics of fluid flow in low
porosity rock
– and in particular the amount and distribution of irreducible water.
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What do we mean by “net pay”?

• Gross = everything. Applies to total interval thickness

without any cutoffs.
• Net sand = clean formation below some shaliness
cutoff, usually a GR cut.
– But porosity doesn’t matter!
• Net reservoir = net sand above some porosity cutoff,
usually picked to separate reservoir thought to be
sufficiently permeable to flow fluids at commercial
rates
– But the fluid phase doesn’t matter – it can be salt water
– And “sufficiently permeable” is an operational definition that
moves with drilling and completion technology
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• Net pay = net reservoir that contains hydrocarbons, in

sufficient amounts to produce at commercial rates
– Involves relative permeability to oil or gas
– Usually defined by an Sw cutoff, or in quick look work by a
resistivity cutoff
– Pay = $$$$. Payday, payroll, payoff, payola.
– Therefore it is an operational, economic definition that
moves with pricing!
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Net pay funnel

GR Net sand

120 20

Porosity Net reservoir

0% 35%

Water saturation Net pay

100% 0%
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“Net pay” in Illinois

• Operators traditionally
use clean formation
with > ~7% as a “net
pay” cutoff in the
Mississippian
• Saturation only
considered to the extent
of shows (either yes/no)
• Based on years of
experience, 1000’s of
DST’s and production
tests
• “Searching for pay with
a perforating gun”
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The typical Illinois “mini-massive” frac

• Another factor setting the perception of net pay is how wells
are completed
• A “typical” Illinois frac since 1970 was:
– 210 to 500 barrels of fluid, with some HCl
– Pumped at 10-14 bpm
– 8,000 to 25,000 lb 20/40 sand

Photo by Jerry Robinson, Franklin Well Services

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“Conventional” porosity perfs

• Relatively few and very
thin high porosity streaks
(< 7%)
• Most perforations in
Salem-Warsaw wells
target these zones (~90%
of them)

> 7%
3% < x < 7%
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But if we add in low φ reservoir…

• Our work has shown that,

in the Salem, only ~20% of
net reservoir is over 7% φ
(“conventional pay”).
• That means that ~80% of
the porous rock is below
7% φ (potentially, “tight
pay”).
• Question becomes – is this
low porosity stuff
productive or not???
> 7%
3% < x < 7%
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• Wilbanks 1-6 Greer 4255 ft

• 12.0% φ, 47.3 mD, Swi 20.6%, Krg , Krg 0.993
• This sample is transitional to lower Salem with coated grains and a few
ooids
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• Rush Creek 1-C Klein 3888 ft

• 10.0% φ, 0.135 mD, Swi 31.2%, Krg 0.533
• Tightest sample – passes traditional porosity cutoff but is near the lower
limit of acceptable perm
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The experiment
• Collect representative suite of plugs over broad
porosity range
• Measure porosity, perm, grain density
• Saturate plugs with brine, centrifuge down to
“irreducible water saturation”
– Defined here as Pc = 200 psi air-brine
• Measure Swi gravimetrically and effective
permeability to gas at Swi
– Gas perm is easier/cheaper than oil
– should be close, if anything slightly optimistic.
• Weatherford Labs, Houston, was our vendor on this
study
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• Two well Warsaw Ls

core study
• n=10 samples
• Only intact cores at
IGS and ISGS we
found suitable for
sampling for SCAL
work

Statistical disclaimer: 10 samples is a

small dataset – we need closer to 30 to
get solid correlations!
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• Nonetheless, we got 9 samples (one outlier) on a trend

• R2 of 0.9997 –something real is here
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• Only two samples had Krg < 1 at 200 psi air-brine

• Suggestive of Krg = 3% at 40% Swi
• In retrospect, we ran the samples to too high a Pc!
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It takes roughly a 300 ft light oil column

to drive saturations down to 40% Swi
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• Greer well points towards 40% Swi at 3% porosity

• But a pessimist could draw a steeper trend thru data
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• We don’t have enough data to tell which model (or both) is

correct
• Probably need at least 20 more samples to make it a solid
call
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How low can you go

• We want to look for as much net low porosity pay as possible,
with shows indicating we have enough oil column height to
fill the reservoir to Swi
• Fracs should be optimized for “A” (surface area)
– Complex fracs that break up the near wellbore region and contact as
much low porosity rock as possible
• Horizontal wells would be drilled to optimize multistage frac
geometry in the stress regime
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Fracs seek complexity near wellbore to maximize

surface area of the formation contacted
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Map view – objective is to shatter the rock

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Conclusions
• Low porosity carbonates can and do produce oil, in very large
amounts
• This is a potential pay opportunity we have not previously
exploited in the Illinois basin
• We don’t know what the lower pay limit is in these
carbonates
– Primarily controlled by the pore size distribution in these rocks
– Which in turn controls Sw irreducible and the relative permeability to
oil as you approach Swi
– Directionally, it could be as low as 3% with a modern frac
• If these rocks do produce at low porosity, it could work over a
very large area of the Illinois basin.
• This is probably a common situation in “old basins”.
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Other opportunities
• The Illinois basin is one of many “old” areas in the US and
Canada approaching the tail end of the production curve
• Lots of depleted, abandoned or almost abandoned fields that
were developed on the 1950’s to 1980’s concept of “net pay”
• The world has changed, thanks to the shale revolution, how
many of these are scattered around out there waiting for
you?
• These are low cost, shallow drilling opportunities ideal for a
prolonged low price environment.