In a move that parish and company officials called significant and opponents decried as minor, Helis Oil & Gas Co. has agreed to slow the development of its planned St. Tammany Parish oil well by adopting a two-phase approach to construction and delaying any “fracking” to the second phase.
During the first phase, officials said Tuesday, Helis will drill a 13,000-foot-deep vertical well, from which it will collect samples for testing. After the samples have been collected, the well will be plugged with cement and the samples will be tested — a process that will take three or four months, parish and company spokespeople said.
Only if the samples show that the underground shale formation at the site could produce a commercially viable amount of oil will Helis drill a horizontal portion of the well and start to utilize the controversial technique of hydraulic fracturing, or fracking, to extract the oil.
The new proposal differs from Helis’ original plans as detailed in an April 15 letter. Under the previous plan, the company intended to begin the horizontal portion of the well before the testing was complete. Under the new plan, only the vertical test well will be sunk in the first phase.
Eric Smith, an associate director of the Tulane Energy Institute, said that while the concession was significant, it could end up being a shrewd business move.
“It could save the company money if there is nothing there,” he said. “Left on their own, they probably would have gone ahead and gone for broke and drilled the whole well, but they are saying: If you want evidence of good faith, we will do it in two phases.”
Smith said drilling in two phases has been done in other places where companies were unsure whether shale formations held enough oil to make drilling commercially viable.
Helis’ proposed well is well to the south of the hub of Tuscaloosa Marine Shale activity, and Smith said it could be a dry hole.
“It’s a good exploratory project,” he said.
Fracking is a process by which water, sand and other chemicals are pumped into the ground to create fissures in rock formations through which oil and gas can be extracted. The process has been controversial around the country, and some communities have moved to ban it altogether, with varying degrees of success.
The company has proposed putting a single well on a 960-acre tract north of Interstate 12 and east of La. 1088. Residents angered by the plan have packed public meetings and launched social media sites and online petitions in an attempt to halt the project. Helis has mostly stayed away from the meetings, preferring to meet with officials and residents in small groups.
Tuesday’s offer by Helis was announced in a news release from parish President Pat Brister’s office. Brister called the proposal a “win” for the parish and said the extra time afforded would be useful.
“It gives us at least four more months to put together any ordinances that we need,” she said. Ordinances to regulate water testing, noise levels, maximum weights on the roads and the hours the well could operate should be considered, she added.
“This (latest offer) is a great proposal as far as the parish is concerned,” she said. “Before we had this, we didn’t have anything.”
Brister and other parish officials have repeatedly pointed to state law, which they say supersedes any parish attempts to prevent the well from being drilled. “We didn’t give up anything. We don’t have anything to give,” she said.
A spokeswoman for Helis said the agreement would add time and about $500,000 in expense to the project, which is estimated to cost more than $16 million. The added expense would come from moving the drilling rig in and out for the two phases, spokeswoman Virgina Miller said.
During the initial vertical well and testing phase, no fracking fluid would be inserted into the well, she said.
Not surprisingly, some of the project’s opponents were unimpressed by the “compromise” offer.
“This is just to snowball everybody,” said Rick Franzo, head of the group Concerned Citizens of St. Tammany. “I think it’s a joke.”
Franzo and CCST have been vocal critics of the plan, accusing Brister of doing too little to stop the well.
Franzo called the latest announcement a “white flag” from the parish and said Concerned Citizens is considering legal action to try to stop the project.
Another opponent, Stephanie Houston Grey, who has started an online petition, said the compromise was pointless and she would not be satisfied until the entire project is abandoned.
Ever since word of Helis Oil’s plans to drill a well in St. Tammany spilled out last month, opposition in the parish has been vocal and strident. Monday night, several hundred people packed a meeting hosted by Parish Councilman Jake Groby. At the meeting, environmentalist Wilma Subra warned of health, environmental and infrastructure problems that could accompany a large fracking operation. Helis did not attend the session, instead sending a two-paragraph statement from President David Kerstein vowing to continue to meet with people “through the mechanisms and venues that do justice to this important project in a way that is both respectful and cooperative.”
Helis has yet to apply for a state drilling permit, which the company will need before it can begin. The company also has agreed to a 30-day delay in a unitization hearing that must be held before the company can apply for a permit.
Helis has also applied for a wetlands permit from the U.S. Army Corps of Engineers. That application is being reviewed, a spokesman said last week.
Follow Faimon A. Roberts III on Twitter at @faimon.