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Another Big 'Ol Frac Boo-Boo

Felix Resources, LLC, drilled and completed a horizontal STACK shale well in Blaine County, Oklahoma in 2015. The well was believed to be completed in the Meramec formation at a total vertical depth of 8,800 feet. When frac'ed the job traveled up, out of zone and collapsed the production casing of a nearby shallow, vertical well producing oil and natural gas at a depth of 4,700 feet. The owner of the shallow well filed suit against Felix for, among other things, mineral trespass.

Apparently this sort of thing happens not too infrequently in Oklahoma, so much so, in fact, they have developed a name for it called, "well-bashing." Its pissed enough folks off that a lot of conventional stripper well producers operating in the STACK play have formed the Oklahoma Energy Producers Alliance to try and combat this sort of thing.

Felix subsequently sold its STACK holdings in Oklahoma to Devon for $1.9 billion, including all pending litigation against Felix. The US District Court (Western Oklahoma) just three weeks ago ruled for the plaintiff in this case and awarded the owners of the ruined shallow well a paltry $220,000 in damages. Devon has not stated if it will appeal the ruling.

Stripper wells do not make Oklahoma mineral owners near as much money as big SCOOP/STACK shale wells, nor do stripper wells generate as much tax revenue for the State of Oklahoma, so, as one might expect, the Oklahoma shale oil industry and its cheerleaders are poo-pooing the verdict as not being a big deal. Shit happens, so they say, and even if this well bashing thing happens more than occasionally in Oklahoma, hey, its just part of it. America needs America's shale oil, no matter how grossly unprofitable it is to extract; what's a few boo-boos now and then...

"There's been this notion that somehow these wells are being damaged with no recourse,"" said Chad Warmington, OKOGA (Oklahoma Oil and Gas Association) President, "and I don't think that that's the case.

OKOGA is an industry oil advocacy group, including Devon and many of the larger oil and gas companies, that are doing much of the horizontal drilling in Oklahoma. Warmington says the horizontal wells his members are drilling are good for Oklahoma and, generally, good for all those with correlative rights."

Yeah, right. Conventional oil producers, it seems, have no correlative rights. "Generally" speaking, that is.

Devon, of course, will blame Felix Resources but will write that award check in a Midland minute and hunker down until this particular storm passes. It still, after all, hasn't resolved it's own litigation issues involving countless earthquakes in Central Oklahoma associated with injecting massive amounts of produced water (from the SCOOP/STACK) back into the Arbuckle formation. We don't hear too much about those anymore but they apparently still rattle windows and lots of grandmas' are still getting their china broken everywhere in that part of the state.

But I think this well-bashing, frac-hit, whatever you want to call it, verdict IS a really big deal. Its proof, unfortunately, that in spite of all the shale oil and shale gas rhetoric about safe frac'ing, sometimes these massive frac's do get out of zone, in this case over 4,500 feet up and out of zone, and what's to keep those frac's from going further up, out of zone, into groundwater aquifers of Western Oklahoma?

The Sierra Club and every other anti-frac'ing organization known to mankind is going to be all over this case like white on rice. As you can see here, this sort of stuff tends to upset folks. American's who love their environment and mistrust the oil industry anyway, just got way more mistrustful. All this kind of out control, stupid stuff does is make it worse for the rest of the American oil industry.

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