Editor’s note: This is one in an occasional series of articles examining the state of major U.S. shale plays at the end of 2022.
In North Texas’ Barnett Shale play, older wells are being rejuvenating and recompleted with modern fracturing technology. The net effect is boosting E&P volumes and midstream opportunities.
The gas play’s top producer, BKV Corp., a private operator based in Denver, has successfully implemented refracturing at more than 200 wells in the Barnett.
Researchers at East Daley Analytics said that although the basin was previously one in decline, the Barnett’s production could stabilize as a result of well refracs—provided natural gas prices remain at or above the economic threshold to maintain the programs.
A successful refrack can boost output from an old well near its original initial production (IP) rate, though production tends to fall off quickly, the analysts said.
And in the Barnett, home to at least 16,000 horizontal wells, the oldest of which is 40 years old, that technology is crucial.
BKV already stood as the top producer in the grandfatherly Barnett after its 2020 entry into Texas, following the purchase of assets from Devon Energy for up to $830 million, including contingency fees.
But the firm supersized in July with the purchase, led by CEO Chris Kalnin, of upstream and midstream infrastructure from subsidiaries of Exxon Mobil Corp. for $750 million. The transaction included Exxon Mobil subsidiary XTO Energy Inc.’s upstream assets in Tarrant, Johnson and Parker counties, Texas, as well as Barnett Gathering LLC’s 750 miles of gathering pipelines, compression and midstream processing.
Kalnin told Hart Energy this summer that he intends to make BKV a Barnett consolidator.
“That’s the strategy, right? You’ve got to be the biggest dog in the play and certainly that’s where we’re going on the upstream side,” he said.
BKV is eyeing additional acquisitions among the Barnett’s “long in the tooth” upstream producers.
“I could see a billion dollars going into that business, upstream,” he said.
BKV’s Barnett thesis relies on four decades and 7,000 wells worth of data, jumpstarting first-generation wellbores with cost-efficient refracs.
BKV on Nov. 18 filed paperwork to conduct an initial public offering, following more than $2 billion in acquisitions in the past two years.The company averages daily production of 864 MMcfe/d, consisting of approximately 79% natural gas and approximately 21% NGL, according to a filing with the Securities and Exchange Commission.
TotalEnergies has been exploring and producing the U.S. since 1957. Its onshore business in the Barnett, called TEEP Barnett, was founded in 2016. From its headquarters in Fort Worth, Texas, the firm is focused on developing natural gas wells in urban areas.
In 2009, Total Energies acquired a 25% stake in a Barnett partnership. Its transaction in 2016 provided the firm with more than 2,800 wells, 750 padsites and over 200,000 mineral leases.
The Paris-based supermajor has plans to deploy new technology that will eliminate about 7,000 tons of methane emissions each year in the play by 2024. During a successful pilot project at the Barnett site in March 2021, Qnergy’s technology proved to be reliable, simple to install and easy to operate, allowing to eliminate up to 98% of the methane venting emissions related to instruments using natural gas.
Following successful additional tests, TotalEnergies has decided to install this new technology by deploying 100 units on the Barnett field in 2021 and 2022.
“To fully play its role in the energy transition, notably as a substitute for coal, the integrated natural gas chain must limit its methane emissions as much as possible,” said Carole Le Gall, senior vice president of sustainability and climate at TotalEnergies.
“We have successfully demonstrated the effectiveness of Qnergy’s technology on the Barnett field. By immediately deploying this technology on our U.S. onshore operations, we are actively demonstrating our commitment to reducing our own methane emissions by 20% between 2020 and 2025."
The next highest grossing producers in the Barnett are private operators: Bedrock Energy Partners in Houston, United Production Partners (UPP) in Houston and Crescent Energy Co., also in Houston.
Bedrock is focused primarily on the acquisition and exploitation of mature onshore assets. It was founded by CEO Will Todd and COO Spencer Cox in 2018. The firm operates gas-weighted properties in seven North Texas counties.
“It’s difficult to be a small operator with a large well count,” Todd told Hart Energy, “but we overcame it by creating a fun culture where data and the accessibility to that data matters. ... Every well matters and every person matters. If you set things up correctly, you give yourself a chance to make the right decision for both.”
UPP was created in 2019 through the combination of long-life assets in Tarrant, Johnson and Sutton counties. Most of the firm’s wells are connected to electronic measurement equipment to enable constant monitoring of wells and facilities. UPP currently operates about 1,095 wells across 99,000 net acres.
Crescent City is managed by private equity group KKR’s energy real estate team.
“We are excited about the potential for continued value creation as we expand Crescent Energy – executing our strategy over the last decade, we’ve built a unique platform with financial strength, asset scale and flexibility that we believe is well positioned to be a leader in a consolidating market,” said CEO David Rockecharlie.
The firm joined the Oil & Gas Methane Partnership 2.1 Initiative in February.
“Crescent Energy is meeting today’s energy needs while focusing on a cleaner tomorrow,” he said.
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