Helis Oil & Gas Co.’s proposed St. Tammany Parish well would tap a previously unexplored rock formation that is limited to the southern part of the parish, according to documents submitted to the U.S. Army Corps of Engineers.
If the formation proves to be a viable source of commercial oil and gas production, it could increase the known fossil fuel reserves in the state and help the United States gain energy independence, Helis contends in the documents.
Though the formation is part of the Tuscaloosa Marine Shale, it has not been explored to date, and Helis wants first to drill an exploratory vertical well on the site to see whether the formation could be commercially profitable.
Helis identified the formation only recently by studying available but “limited” data from old vertical wells, according to documents filed with the Corps of Engineers, which needs to grant Helis a permit to drill in wetlands before the project can proceed.
The uncertainty means the rock formation has only a 50 percent chance of being commercially viable, a figure previously cited by a geologist who reviewed the plans for the Corps and with which Helis agreed, the documents say.
“It is far from certain that any drilling operations will be conducted after the completion of Phase I,” Helis says in its most recent filing, a 500-page response to questions raised by the Corps in December. Despite the uncertainty, Helis is willing to take what some have estimated is a $16 million to $20 million gamble on the well, even with oil prices at their lowest point in years.
The low price of oil has driven some companies out of production activity in the Tuscaloosa Shale, but Helis spokespeople have steadfastly insisted that the current price will have no impact on the company’s plans.
A spokesman reinforced that sentiment Friday.
“Helis remains committed to this project and to the established processes for permitting the well, regardless of oil prices or the period of time this particular process will take,” Greg Beuerman wrote in an email.
Data from old wells show that a swath of the underground formation roughly parallel with Interstate 12 is thick enough to accommodate a horizontal well needed for fracking, Helis said. The formation thins out the farther north one goes in St. Tammany Parish, though the formation’s exact boundaries remain unclear pending further data, Helis said in the letter.
Helis said it chose the site of the proposed well — a 960-acre tract about a mile north of I-12 and about a mile from Lakeshore High School — in an effort to avoid the coastal zone south of I-12 and to isolate the well as much as possible from residential areas to the west and sensitive environmental areas such as Bayou Lacombe and the Pearl River Wildlife Management Area.
Because the formation it is eyeing is specific to the local area, Helis emphasizes in the letter that it would be impossible to move the project northward to another part of the Tuscaloosa Marine Shale where drilling is already underway.
“Helis’ proposed project cannot be conducted and its purpose cannot be fulfilled by simply drilling a well anywhere within the established Tuscaloosa Marine Shale Play that is being actively produced to the north of St. Tammany Parish,” the letter says.
Some experts have estimated that the TMS contains as much as 7 billion barrels of oil. If the new formation is a viable commercial source of oil, “it will increase the known oil and gas reserves within the state available for potential production and contribute to achieving the national policy goal of energy independence in the United States,” the letter says.
Helis is prepared in case the formation proves able to produce commercially viable amounts of oil. The company has leases or options on about 60,000 acres in St. Tammany Parish.
Helis’ description of St. Tammany’s unique geological formation is part of a voluminous response to a December letter from the Corps. That letter detailed several concerns of the Corps and the U.S. Environmental Protection Agency.
The EPA urged the Corps to reject Helis’ application for a wetlands permit until the company can show that the well would have minimal environmental impact. Issues raised in that letter and a similar one sent two days earlier — such as storm contingency plans, traffic impacts, water sources and legal entanglements — are all addressed in Helis’ response.
Helis’ proposal has generated considerable public heat, including lawsuits filed by the Parish Council and the town of Abita Springs. Most of the opposition has centered on Helis’ plans to use horizontal drilling and hydraulic fracturing, or fracking, to extract oil from the St. Tammany site.
Fracking is a process by which water, sand and other chemicals are injected into the ground at high pressure. The chemicals crack the rock, the sand or other ceramic material props the cracks open and oil or natural gas then can be extracted.
Helis has proposed drilling the well in two phases: an initial phase, in which a vertical well would be drilled and samples collected for testing, and then a second phase in which a mile-long horizontal shaft would be drilled and fracking would be employed. The company has promised to plug the well and not move on to Phase 2 if the samples collected in the first phase are not promising.
But in St. Tammany, as in some other communities around the country, the prospect of fracking has created a backlash. The Parish Council filed a suit in Baton Rouge to block the plan, and a hearing on that suit is scheduled for Feb. 2.
This weekend, two activists who led a campaign in Denton, Texas, to get an anti-fracking measure on the ballot are appearing in St. Tammany to share what they learned. That measure passed in Denton but is now being challenged in court.
Fighting back against the vocal opposition, business groups such as the Northshore Business Council and the St. Tammany West Chamber of Commerce have come out in support of the Helis plan. They point to potential economic benefits to local businesses and say that fracking can help reduce U.S. dependence on oil imports.
Winning a wetlands permit is the only remaining regulatory obstacle before Helis can begin construction on the 3.2-acre drilling pad. Last month, the state’s commissioner of conservation issued a drilling permit for the project, though the permit came with a list of conditions to which Helis must adhere.
This wetlands permit application is Helis’ second. The company was forced to submit a revised application after geologists expressed concerns about whether a proposed 10-acre drilling pad — suitable for both the vertical and horizontal wells — was necessary for an exploratory vertical shaft.
If the wetlands permit is issued and Helis later decides to drill the horizontal well, it will have to apply for another wetlands permit from the Corps to expand the drilling pad.
Follow Faimon A. Roberts III on Twitter, @faimon.
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Follow Faimon A. Roberts III on Twitter, @faimon.