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Where Will U.S. Frackers Drill Next?

Tsvetana Paraskova,

With WTI oil prices staying above $60 a barrel for several months, U.S. drillers are breaking production records each week, mostly thanks to the Permian in West Texas and New Mexico. In recent months, however, some companies have started to test their fracking capabilities on oil fields that most agree reached their peak production decades ago.

Drillers believe that it’s a winning bet. Analysts say it could be a breakthrough for the more challenging chalk formations in East Texas and Louisiana. Authorities and industry officials in Louisiana believe there’s a resurgence in one of the old oil-producing areas in the state and want to support investment in the region.

The Austin Chalk, which stretches from Texas to the Gulf of Mexico and cuts through much of central Louisiana, is one of those formations that was ‘hot’ back in the 1990s, but has been forgotten since then, especially after hydraulic fracturing shifted the industry attention to other areas in the United States—the Bakken in the north and the Eagle Ford and the Permian in Texas.

Companies have started to drill frac wells in the Austin Chalk, where the number of drilling rigs has doubled over the past six months to 14, and oil production surged to 57,000 bpd last year from just 3,000 bpd five years ago.

The Austin Chalk play is going through a resurgence in activity, and new horizontal drilling and completion techniques have resulted in substantial production rates, according to the State of Louisiana’s Department of Natural Resources. The eastern portion of the Austin Chalk play has unexplored and underexplored areas with significant open acreage available, the department said in March this year.

Historically, the majority of the production has occurred in the western half of the state, while new permitting and leasing activity is concentrated in the central and eastern portions of the play in Rapides, Avoyelles, and Pointe Coupee parishes.

Marathon Oil Corporation, for example, bought a largely contiguous position in the emerging Louisiana Austin Chalk play last year at a cost of less than $900 per acre.

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