Oklahoma’s STACK play set for multi year activity increase

By Staff | July 14, 2017

A new study on Oklahoma’s STACK shale play forecasts a 46 percent increase this year in the number of wells drilled in the formation, a trend expected to continue into 2018.
Dan Debelius, an analyst with The Freedonia Group, provided North American Shale with additional information on the study’s findings.

What are the breakeven costs in the STACK play? How do they compare to other Oklahoma plays?
We believe that in some of the most economical portions of the STACK that breakeven prices fall near $30 per barrel. This makes the STACK one of the most economical plays in the U.S., behind only certain core areas of the Permian Basin. Contributing to the low breakeven price are the STACK’s geology, which is characterized by multiple stacked layers of resource-bearing rocks, and low transportation costs, in part resulting from its proximity to Cushing, Oklahoma. The STACK seems to be the most promising play in the state. Outside of the STACK, the SCOOP is another promising play with formations like the Woodford and Springer shales.

How do breakeven costs in the STACK compare to the Permian in Texas and the Bakken in North Dakota?
It would appear that breakeven costs in the Permian Basin are the best in the U.S., given the amount of investment occurring in the past year—over $30 billion dollars in acreage transactions have occurred during that time span. The Bakken would likely fall behind the STACK in terms of favorable breakeven costs, but it is still a high-quality play.

When do you see oilfield services companies in Oklahoma beginning to raise prices again?
We believe prices have already started to increase as a result of the recent rebound in activity. One concern is a potential shortage of labor as employees who were laid off during the downturn may not return to the industry.

Has the export market opening up for U.S. crude created more opportunities for STACK producers?
Crude exports have begun to provide an important market for US oil producers, with the EIA reporting exports exceeding 1 million barrels per day for the first time ever in February. Also important is the emergence of liquefied natural gas (LNG) exports, which we expect will support domestic gas prices in the Gulf Coast region and translate to better wellhead prices for producers of associated gas.

What completion techniques are preferred by STACK producers?
Companies are still experimenting with well spacing, lateral lengths and the optimization of their completion designs.  Most seemed to have settled on proppant loading of over 2,000 pounds per foot. Some have cited success with zipper frack designs on multi-well pads.  To some extent, this reflects similar advancements in drilling and completion practices that have been seen across the U.S.