The Mississippian Lime: America’s Next Big Resource Play
The Mississippian Lime, located in South-central Kansas and North-central Oklahoma, is a shallow carbonate play (mostly Limestone) with depths ranging from 3,000 feet to 6,000 feet. The Lime is not a new play, but an old producing field with more than 30 years of production and 14k vertical wells drilled. It’s now being redeveloped using horizontal drilling and fracking techniques, and in that respect, could be compared to the Permian Basin of West Texas. While conventional production in the play stemmed from the “Mississippian Chat,” a reservoir with high porosity and permeability above the Lime, new development is targeting the tighter Mississippian Lime that lies underneath the Chat. The formation was subject to weathering and digenesis and erosion at the regional unconformity. This results in greatly varying reservoir properties both horizontal and vertically. Where the digenesis and weathering have enhanced the reservoir properties, the porosity is generally 15-20 per cent and can be more than 100 feet thick. Where it has not been enhanced, the porosity is only 4-6 percent and has low permeability. This results in lateral discontinuous reservoirs that are ideally developed with horizontal drilling technology.
The Lime is shallower than the Bakken and Eagle Ford, companies use smaller drilling rigs and cheaper proppants, which has led to drilling and completion costs between $3 and $3.5 million, less than half of what an operator would pay in the Bakken or Eagle Ford. The play is estimated to span 17 million acres with oil in place estimates ranging from 5.4 to 5.9 billion barrels of oil equivalent (BBOE). An intelligent discussion on the Mississippian Lime can’t be had without talking about Sandridge, which has drilled 382 horizontal wells, or 44% of the total horizontal wells drilled in the play. The company has amassed 1.7 million net acres in the Lime, from which it expects to generate estimated ultimate recoveries (EURs) of 456 thousand barrels of oil equivalent (MBOE) per well.
The Mississippian is by far the cheapest formation to produce from with respect to the peer group. The Mississippian is a play that produces more hydrocarbons per dollar with the main negative being a lower oil cut. Despite its lower oil cut, an average rate of return of 119%, a rate that has plenty of natural gas pricing upside. The Lime also gets oilier as you move from East-to-West, and several wells in Alfalfa County, Oklahoma with 30-day production rates in excess of 2,000 BOEPD (90%+ oil cut). So while it’s a gassier oil play than some would like, oil cuts vary and returns are high. These numbers aren’t going unnoticed by the oil and gas industry, but have prompted industry titans such as Chesapeake Energy, Apache, Devon Energy, Encana and Repsol to accumulate large acreage positions in the play.