1997 ANNUAL REPORTGrowth in United States Tight Sands Production
During the past decade, production of natural gas from tight formations has played an increasingly important role in the nation’s energy supply, accounting for 85% of the increase in U.S. natural gas supplies from 1992 to 1995. Swift Energy is capitalizing on this trend, with natural gas comprising 92% of the reserves at its major tight sands property, the South Texas AWP Olmos Field, which, in turn, represents 74% of the Company’s total proved year-end reserves.
Production from the AWP Field increased approximately 350% from 1995 to 1997 to 15.5 billion cubic feet of natural gas equivalent, accounting for 61% of both the Company’s total production and its oil and gas sales. The 1997 increases were largely due to the addition of 137 new development wells during the year, increasing to 298 the number of successful wells drilled in the area since early 1995. During 1997, the Company increased its total leasehold acreage in the AWP Field to 40,568 net acres by acquiring an additional 2,830 net acres in the heart of the field. The new acreage included an estimated 35 new development drilling locations, 35 producing wells, and estimated proved reserves of 25 Bcfe. In addition to the AWP Field, Swift expanded its tight sands activities into a new geographic area in 1997 with a successful exploratory well drilled to the Queen City formation on a lease/option block (10,420 gross acres) in Jim Hogg County, Texas. A confirmation well drilled on the acreage in the first quarter of 1998 also was successful. Swift’s experience in the exploitation of tight sands extends back nearly two decades to 1979 when the Company first developed properties in West Virginia to take advantage of federal deregulation and tax incentives that resulted in higher prices for natural gas produced from tight sands. In the late 1980s, Swift began acquiring tight sands properties in South Texas following the 1986 plunge in energy prices, which resulted in a substantial number of producing properties being placed on the market. Though government incentives for tight sands production were reduced in the early 1990s and energy prices remained moderate, Swift continued to achieve strong earnings from its tight sands properties as it transitioned from acquisitions to exploration and development. The major reason for this success has been the Company’s expertise in using innovative technologies to cut costs, improve efficiency, and increase well performance.
One technology critical to Swift’s tight sands achievements has been hydraulic fracturing of the formation to create pathways for the oil and natural gas to flow into the wells. By continuously improving the fracturing fluids and the accompanying sands pumped down the wells and out into the formation, and by also optimizing their injection rates, the Company has cut costs dramatically and improved production. In 1997 Swift reduced fracturing costs by over 50% in some areas of the AWP Field by using more water and less sand in the fracturing fluid. Another key innovation is Swift’s use of small-diameter coiled-tubing velocity strings in older wells to speed the upward flow of the natural gas and prevent the buildup of liquids clogging the well bore. Swift was the first operator in the AWP Field to implement this technique. Swift also has lowered drilling and completion costs on its tight sands properties by using slim-hole drilling, which reduces drilling time, decreases drilling mud quantities, and requires less expensive casings, together with single-stage cementing, which eliminates the need for a stage tool and a completion rig at the well site. Other cost-reducing technologies that Swift has introduced in the AWP Field include remote monitoring of the hydraulic fracturing process, remote monitoring of production, and a centralized gathering system. Swift Energy plans to further expand its tight sands production in 1998 by drilling 57 development wells and four exploratory wells to the Olmos Sand trend and 10 development wells to the Queen City formation. The Company also plans to refracture 40 older AWP Field wells to increase their production. To help identify other future well locations, a two-dimensional seismic survey was conducted in the AWP Field during 1997. With the knowledge and experience it has gained in developing and producing from tight sands, Swift Energy anticipates expanding its operation to other tight sands formations in the future.
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This page was last updated on Saturday, February 08, 2003, at 07:28:45 PM. Copyright © 1994-2008 by Swift Energy Company. |
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