AMIDON — Hydraulic fracturing of the Tyler shale formation was expected to liven the sleepy plains of Slope County with oil activity.
But more than two years after the first well was spudded, three horizontal wells drilled by Marathon Oil Co. between September and December of 2013 have proven economically unfeasible and are now abandoned. A permit for a fourth well has been canceled.
The challenging geology of the play combined with the steep drop in oil prices kept Marathon from setting off another shale play in western North Dakota, said Timothy Nesheim, a subsurface geologist with the state Geological Survey.
Nesheim said the first two Tyler test wells “produced oil at rates too low to be economical at nearly any oil price.”
It’s a sharp change from September 2013, when Marathon estimated it could produce about 1.6 million barrels of oil equivalent from four test wells it had received permits to drill.
The wells produced 4,471 barrels of oil and 5.2 million cubic feet of natural gas, all of it coming from the Rundle Trust 29-21H and Powell 31-27TH wells, according to state Department of Mineral Resources Oil and Gas Division data.
Nesheim said the Rundle well — one of two drilled on a pad — had an initial 24-hour production rate of 88 barrels of oil per day and stabilized at just 7 bpd “for several months before it was plugged and abandoned.” By comparison, Bakken wells are producing an average of 117 barrels a day so far in 2015, according to Oil and Gas Division data.
Even at oil prices of $80 to $100 a barrel, the well’s production rate was about 5 to 10 percent of what it needed to be economical, he said.
“We had our hopes up. It looked good,” said Ken Urlacher, who farms and ranches on the Rundle land and takes care of the landowner’s cattle operation. “Obviously, if it didn’t look good, they wouldn’t have spent all the money in it and put the tanks on it.”
Activity and rumors
Ken Hanson, a landowner who lives near the Rundle well site, said from late 2013 until earlier this year, the area “was just a beehive.”
Countless trucks needed to service drilling rig operations populated the quiet roads in one of North Dakota’s most rural and unpopulated areas 24 hours a day, Hanson said.
Marathon, which when reached for this story had no comment on its activity in the Tyler, had reason to suspect it may be drilling into a sustainable oil play.
The Tyler has been a known commodity for several years, Nesheim said, adding around 70 wells still produce oil from the formation, “the majority of which are vertical wells drilled before the Bakken-Three Forks play emerged.”
Most Tyler wells produce oil from sandstone that lies far beneath the ground between Dickinson and Medora. The formation has produced about 85 million barrels of oil since the late 1950s, according to a report by Nesheim and his colleague, Stephan H. Nordeng.
However, vertical drilling has gone about as far as it can in the Tyler, Nesheim said.
In early 2013, the Department of Mineral Resources approved four horizontal drilling permits for Marathon in Slope County. Historically, the county peaked at 64,937 barrels of oil produced in January 1998 and has been fairly steady ever since, producing 30,239 barrels in September, according to Oil and Gas Division data.
Urlacher said once the new rigs went up on the Rundle land, rumors quickly spread about what Marathon was finding.
“A lot of that stuff we hear is all hearsay,” Urlacher said. “Guys were spreading all kinds of stuff around.”
Robert Rundle, who handles his family’s trust and runs cattle on the land where the wells were drilled, said he learned secondhand from Urlacher that the well was being taken down after the rancher witnessed activity on the pad. Marathon later informed Rundle, who lives in the Minneapolis area, that the well was being abandoned.
Rundle said he has maintained a strong working relationship with Marathon despite the well’s abandonment and called the company responsive and professional. In August, Marathon filed its intent to reclaim the well site.
He said he’s hopeful the Tyler will prove to be a horizontal drilling play that proves sustainable one day — if not for him, for other mineral rights owners in Slope County.
“They’ve proven oil is there,” Rundle said. “They just have to get it out. That’ll depend on the technology coming down the pipe.”
Tough to tap
Understanding the geologic details is key to realizing the Tyler’s potential, Nesheim said.
The clay content of the formation is different from the middle Bakken and upper Three Forks reservoirs, he said, adding the Tyler has a “high and highly variable clay content,” which is softer than the low clay content in the more productive Bakken and Three Forks formations. The type of clay in the Tyler can swell when it comes in contact with water and could potentially close up fractures created during the fracking process.
“Overcoming the Tyler’s clay content is likely one obstacle in unlocking its resource play potential,” Nesheim said.
Tyler oil also contains higher concentrations of paraffin — about 30 to 40 percent of Tyler oil is paraffin, Nesheim said — which makes it waxy and a much different consistency than Bakken oil.
“Tyler oil has a similar consistency to candle wax,” Nesheim said.
It’s solid at room temperature but becomes liquid when heated to 100 to 120 degrees, he said. Bakken oil stays a liquid until cooled far below freezing temperatures.
Nesheim said there are no oil plays in the U.S. being hydraulically fractured that are similar to the Tyler when it comes to its clay content.
He said there are reports out of western Saskatchewan, where the Viking formation also yields paraffin-rich oil, that some operators are attempting to engineer fracking techniques that have reportedly increased production.
“However, I talked directly to a geologist that has worked the Viking play, and he didn’t believe the paraffin-rich oil of the Viking formation played any role in hydraulic fracturing,” Nesheim said.
Despite the early Tyler horizontal wells proving relatively unsuccessful, Nesheim said not all is lost for the formation as a horizontal drilling shale play, especially if oil prices improve.
He said Bakken wells drilled in the early 2000s had similar production results before the advancement of technology and the geological discoveries of better drilling areas.
“More than a dozen Bakken wells were drilled across western North Dakota before EOG (Resources) unlocked the play in the Parshall field,” Nesheim said. “Now there are some of the early disappointing horizontal Bakken wells that are surrounded by very economical, productive wells due to better drilling and completion methods.”
Hanson, the landowner who watched the Rundle well closely from its spudding to abandonment, echoed Nesheim.
“Just the wrong place and time,” he said.