By Mark Hengel
Copyright Arkansas Business Aug 11, 2008
RISING ENERGY PRICES have made exploiting many of Arkansas’ natural resources more viable, and many of those resources are in south Arkansas.
“The price of energy commodities always renews interest in Arkansas’ resources,” said Ed Ratchford, senior petroleum geologist at the Arkansas Geological Survey. “Arkansas is rich in fossil fuels and has a long history of production of fossil fuels.”
Recent developments prompting increased interest in energy production in south Arkansas include:
Improved technology that could make mining deposits of lignite, a low-grade form of coal, economically feasible.
New technology that could allow energy companies to reach the roughly 70 percent of oil believed to remain beneath the surface of the area’s fields.
Indications that the Haynesville Shale Play, a natural gas shale play beneath northwest Louisiana and cast Texas, may extend into south Arkansas.
Identification of the Ouachita Mountains as a possible source of natural gas.
Lignite currently is the source of the greatest enthusiasm about the area’s fossil fuel potential. The state Legislature’s Joint Interim Committee on Energy voted unanimously last week to support a study of the lignite deposits. The study – if it receives the $1.25 million needed from the state Legislature – would outline the lignite deposits in Arkansas and the best uses for the deposits.
“We are going to get out and sell this resource to the industry,” Ratchford said during the committee meeting.
Tapping the Resource
The rise in energy prices has caused many of Arkansas’ natural resources to become more viable, Ratchford said.
Michael Jones, senior research adviser with the Energy & Environment Research Center in Grand Forks, N.D., said the purpose of the proposed lignite study is to identify Arkansas’ deposits, determine the lignite’s quality and help Arkansas determine possible uses for the resource.
“We try to make either smart buyers or smart sellers,” Jones, who has a doctorate in physics, said during the Joint Committee on Energy meeting.
The EERC, which is part of the University of North Dakota, is the world leader in developing applications for low-grade coals, Jones said. The EERC can be thought of as doing for lignite what George Washington Carver and the Tuskegee Institute did for peanuts. The EERC had 442 active contracts in fiscal 2007, with 84 percent coming from private entities.
Ratchford, of the Geological Survey, said he thinks it is only a matter of time until the south Arkansas lignite deposits are tapped.
“Arkansas is sitting on it. It’s a huge resource,” Ratchford said. “It will be developed; it’s just a matter of how it’ll be developed.”
Ratchford said he hopes that the study will allow for the proper type of development. A plant similar to the Dakota Gasification Co. would be preferable, he said.
“Anytime you can refine the resource in the state, the state is going to receive a higher dividend,” Ratchford said.
In North Dakota, the Dakota Gasification Co. has operated the Great Plains Synfuels Plant since 1984. The plant produces 54 billion standard cubic feet of natural gas each year, while consuming 6 million tons of coal a year.
During the committee meeting, Jones cited an economic impact study conducted by North Dakota State University researchers that found the lignite industry had a $2.1 billion impact on the state of only about 650,000 residents. The industry employs about 4,000 directly and about 20,000 indirectly.
The synfuels plant also produces fertilizers, solvents, phenol, carbon dioxide and other chemicals. The plant’s carbon dioxide is piped to Canada for enhanced oil recovery.
The Arkansas Geological Survey is working on several studies of geological formations in Arkansas that could yield either natural gas or oil.
In south Arkansas, natural gas companies and the Geological Survey arc exploring the possibility that the Ouachita Mountains – known to geologists as the Ouachita Fold and Thrust Belt – contain natural gas. The survey is working with natural gas companies to produce a report.
“There are companies today that are exploring it for potential deep natural gas,” Ratchford said. “The Arkansas Geological Survey is assisting the companies with geological information.”
The gas is at depths of more than 8,000 feet, he said.
“We’ve seen renewed interest using more innovative technologies,” Ratchford said. “As technologies develop, it gives you the opportunity to look at places that were marginal.”
The south Arkansas oil fields have been producing oil since the 1920s. Drilling companies have extracted much of the oil that they could with the available technology, Ratchford said. However, he estimated that technology has allowed only about 30 percent of the field’s oil to reach the surface, leaving roughly 70 percent still below the surface.
Companies are now using three-dimensional seismic mapping to better understand the field’s reserves, Ratchford said, and the recent development of horizontal drilling techniques for oil could also lead to more oil flowing from the field.
The oil fields could also benefit from a synfuels plant, Ratchford said. As a synfuels plant refines lignite, carbon dioxide is an abundant byproduct. The carbon dioxide can be pumped into the geological formation where the oil is found, which pushes previously trapped oil out of the well.
Energy companies involved in the south Arkansas fields used the method for a short time, with promising results, Ratchford said. The practice – known as enhanced oil recovery – did not continue because companies could not find a reliable source of carbon dioxide. Texas oil fields have also used EOR, and the synfuels plant in North Dakota pumps its excess carbon dioxide to the Weyburn Oil Field in southern Canada.
EnCana, a Canadian oil and gas company, is using EOR to further develop the Weyburn field. The field produced about 45,000 barrels of oil per day at its peak in 1965, according to EnCana. By 1998, the field had produced about 330 million barrels of oil using various drilling techniques. Original predictions estimated that the field could not produce more than about 350 million barrels – only 25 percent of the field’s capacity, according to Schlumberger Excellence in Educational Development, a nonprofit financed by Schlumberger, an oilfield resource company.
Estimates show that carbon dioxide EOR will increase the Weyburn field’s output by 130 million barrels of oil, extending the field’s life by about 25 years. EOR also serves the double purpose of sequestering carbon dioxide, and the Weyburn CO2 Monitoring & Storage Project is assessing whether carbon dioxide will remain underground permanently.
There is also a possibility that the Haynesville Shale might extend into southern Arkansas, Ratchford said.
The Geological Survey has examined information from a few wells, Ratchford said, but the sample size is too small to determine whether any substantial natural gas reserves extend into southwest Arkansas.
“We are just starting to look at that,” Ratchford said. “The preliminary indication is that it does, but it is very early” in the research project.
Ratchford added that even if the Haynesville Shale Play extends into Arkansas, it might not have the thickness needed to support commercial drilling. Research is inconclusive at this point though, Ratchford emphasized.
Claude Baker is director of the Lignite Research Institute at Southern Arkansas University. He said Arkansas should take advantage of resources such as lignite to avoid repeating past mistakes.
“When the price of oil went down, we didn’t do much with what we had,” Baker said about the aftermath of the energy crisis in the 1970s. “We looked into a lot of alternate energy sources, but we didn’t follow through, and now we are in a similar crisis.”
Baker has been developing the institute, which now has 10 researchers, during the past year with help from a $100,000 grant provided by the Arkansas Legislature. The institute is still in its infancy, but Baker said he hopes to begin producing research projects soon.