Avalon Shale Play In New Mexico and Texas

In a March, 2011 investor presentation, Chesapeake Energy reported success in the Avalon shale with the Ross Ranch Federal #1H producing 1,508 boe/d (barrels of oil equivalent per day) and 2.3 mmcf/d of natural gas. The Avalon shale play is another name for the Leonard Shale play (also called the Upper Bone Springs Formation) in New Mexico and West Texas which is part of the Bone Springs Formation.  It represents part of the Chesapeake’s goal to become more involved in liquids rich plays and decouple the company from natural gas.

“We currently own approximately 4.1 million net acres in our liquids-rich resource plays in the U.S. on which we have identified approximately 12,000 net drilling locations to develop 2.4 tcfe of total proved reserves and approximately 31 tcfe of risked unproven resources.”

Chesapeake Energy reportedly holds over 300,000 acres of leases in the Avalon shale and Bone Springs plays.  Chesapeake Energy reports that is has significant holdings, (over one million acres leased) in an undisclosed liquids play, which it plans to provide further details on later in 2011.

See map of Avalon shale play in New Mexico  below:

Upper green area represents the Avalon shale, the lower area shows the Bone Spring Formation.

The Avalon shale is both a natural gas and oil play.  The Avalon shale formation has been known about for a long time, as it was drilled through to reach more conventional oil and gas reservoirs below it. Wells are drilled horizontally and hydraulically fractured with over two million gallons of water in six to eight stages.  Most of the current activity is centered in Eddy, Lea and Chaves counties of New Mexico. See map of southeastern New Mexico above.  EOG Resources, Devon Energy, Marbob Energy, (recently acquired by Concho Resources) and Chesapeake Energy are all active in developing the play.  Devon Energy has acquired over 235,000 acres that is prospective to the Avalon shale.

For more on the Avalon shale play, see this related article on the Leonard Shale.