Never Give Up - Can Higher Crude Oil Prices Revive the Tuscaloosa Marine Shale Play?

A long, long time ago — or, more precisely, in the spring of 2014, when WTI was selling for more than $110/bbl — a handful of exploration and production companies were convinced they were onto something big in southwestern Mississippi and east-central Louisiana. There, they believed, the Tuscaloosa Marine Shale (TMS) was poised to become the next Bakken, the U.S.’s premier shale play at the time, but even better for producers seeking more robust crude prices because of TMS’s very low gas-to-oil ratio — an oil cut north of 92%! –– and proximity to Gulf Coast refineries. While there had been a host of failed efforts by producers to wring out large volumes of premium-priced Louisiana Light Sweet (LLS) oil from the marine shale’s sedimentary silts and clays, the E&Ps felt in their bones that they were finally “cracking the code.” Then, at just the wrong time, came an oil price crash that set the whole industry back on its heels and activity in the TMS quickly slowed to a crawl. As we discuss in today’s RBN blog, an even smaller cadre of Tuscaloosa Marine Shale true believers is now banking on a production revival in the core of the play.

As we said in our first blog on the TMS back in 2013, the sedimentary rock formation — generally only a couple of hundred feet thick — lies 12,000 to 18,000 feet below the surface of a swath of central Louisiana and southwestern Mississippi (purple-shaded area in Figure 1). A 1997 study by the Louisiana Geological Survey estimated the 8-million-acre shale play has potential reserves of 7 billion barrels of oil, which would make it among the most hydrocarbon-rich regions in the U.S. The dark gray marine shale within the formation consists of fine-grained, organic-rich sedimentary silts and clays deposited more than 80 million years ago. The Eagle Ford deposits in South Texas were formed at about the same time, but they are closer to the surface — 5,000 to 7,000 feet, typically — and the rock is more brittle and far more permeable. The sediment that washed down the Mississippi River gave the TMS a different geological composition that makes it much more difficult to recover oil from it. The depth and low permeability of the play’s soft rock and clay scared off many a driller, as did the thin layer within it that offers natural fracturing (and increased permeability).

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