This long-known Nevada rock remains underexplored.
As Noble Energy Inc.’s exploration of the Elko Basin in northeastern Nevada has captured industry and Wall Street attention, Utah-based Phoenix Oil & Gas LLC has developed three prospects south of Elko, including for Chainman shale. Oil and Gas Investor visited with Jonathan Baker, landman for Phoenix, recently, including at NAPE in Houston in February.
Investor Oil production from Nevada has been hit or miss in the past—mostly miss?
Baker Shell (Oil Co.) was the first major active in the basin. They had to create their own topographical maps; these didn’t exist before then. They spent years in southeastern Nevada studying this and then a corporate decision was made to exit Nevada. All that data was kind of lost.
There was a Grant Canyon well in the 1980s that made 4,000 barrels a day for eight years without decline. It was a miraculous discovery. The operator tried to offset that well, but they really couldn’t find anything else. They happened to nail (the formation in that one). The volume of oil produced from that zone—there is oil more than three times the pore space available for it, so it is a dynamic reservoir. It’s coming from somewhere else and it’s tied to the Chainman shale.
In the mid-1980s, Exxon (Corp., pre-merger with Mobil) had a huge area out here. We believe they were onto it, but Valdez happened and they had to forfeit all of their land in the frontier areas. After they pulled out, it seems all the big boys quit looking out here.
Investor Tectonic shifting and other geologic events have made the subsurface in Nevada particularly complex?
Baker Yes. This makes it difficult for conventional 2-D seismic to build a view of the subsurface very well, at least using older seismic methods. Noble Energy is shooting 3-D here; it is in the Elko Basin. I spoke with them at NAPE and they seemed pleased with data from the first shoot; they’re gearing up for their second. Chainman shale isn’t the target where they are. We’ve always compared that area to the Uinta Basin in terms of setting and maturity. We wish them success.
Investor Their success would bring oilfield services to near your prospect area?
Baker Yes. It would also get people to take a second look at Nevada.
Investor From what formations have producers made wells in Nevada in the past?
Baker Most wells in Nevada have only been drilled to 2,000 to 4,000 feet and are in the volcanics. The Grant Canyon well was a 4,500-foot test in Devonian. That’s where the 4,000 barrels a day came from. It is an extremely prolific, karsted-dolomite-type section, several hundred feet thick.
There has recently been a new discovery, Tomera Ranch, up in Pine Valley in Eureka County. The operator is Andromeda Oil LLC. They’re producing from around 2,000 feet from a sand within the Chainman. They’re not really strong wells. They’re conventionally drilled and we think they’re conventionally completed too. So who knows what could happen if you put a larger frac job into this formation?
Investor How long have you had these prospects?
Baker Four or five years ago, we started putting them together. We met a group in Texas that had a good finding tool we liked. We high-graded three prospect areas in Nevada. We then met a gentleman who had looked at this too. He had done some conventional field work, attitude collection, rock samples—the old-school geology. He had high-graded the same three areas. These happen to be where Exxon’s big contract area was and Chevron had a contract area at one time as well. So we’re within the sandbox. We think we’ve high-graded where in the sandbox we want to be.
Investor Are there bail-out zones in the area?
Baker The nice thing about where we’re situated is we have a very nice, stacked potential here. We have the Chainman shale that is a geological equivalent of the Barnett stacked on top of the Pilot shale that is the geological equivalent of the Bakken out here, with very large conventional opportunities—anticlines, regional karsting in the Devonian—below that. From a big picture, you have three really good shots out here—if just drilling deeper than what’s been done in the past.
Editor’s Note: Baker can be reached at firstname.lastname@example.org. Details of drilling in Nevada, based on state records, are available here.
-Nissa Darbonne, Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at email@example.com.
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