Florida actually was a decent-sized producing state in its past. But that was a while ago. In this week’s Oilgram News column New Frontiers, Starr Spencer looks at that past and some possible paths for its petroleum-producing future.
Think Florida, and relaxing images come to mind of white sandy beaches… palm trees… oranges… sunny warm weather… oceanfront hotels… gentle waves lapping at the coastline… and oil production?
Well, there’s not large amounts of the last item on that list. But although many people mistakenly believe a ban against drilling offshore Florida’s parcel of the Gulf of Mexico extends to the entire peninsula, the reality is that the state does have some oil and gas exploration — albeit on land.
It’s not much. By the US Energy Information Administration’s reckoning, Florida produces about 6,000 b/d of oil, a level that has kept fairly steady throughout most of 2012 and represents a gradual decrease over the last decade. But many operators are trying to at least hold the volumes steady and possibly eke out a little more.
Florida’s oil production has dwindled over the years, but as recently as 1981 the state was producing over 100,000 b/d, according to data from EIA, the statistical arm of the US Department of Energy. Natural field declines paired with the oil price collapse of the 1980s to depress output, so that by 1990 it was a mere 20,000 b/d, and it has been well under 10,000 b/d for most of the last decade, EIA data show.
“Our state peak production was in 1978, but has been on the decline ever since,” said Ed Garrett, administrator of the oil and gas regulatory program at the Florida Department of Environmental Protection. “A few fields were discovered and produced in the 1980s, all relatively small, but they too have declined.”
The state has had no discoveries since 1988, Garrett said.
Just last week, Florida basked in industry’s spotlight not for its tropical climate and scenery but from an acquisition by a small, aggressive public oil producer, Houston-based QR Energy. QR paid $145 million to its sponsor, privately held Quantum Resources Fund, to own 93% in the Jay field.
Jay, spread across 14,600 acres in the far western Florida Panhandle and a tiny nick of Alabama’s Escambia County, now supplies about 2,500 b/d of equivalent oil production — about 88% oil and 13% natural gas liquids.
The field, located about 30 miles north of Pensacola, was discovered in 1970 by Exxon (now ExxonMobil), and originally was estimated to contain 1 billion barrels of oil. That amount now in place has dwindled by about half, QR Energy CEO Alan Smith said during a conference call last week on the transaction, which was announced late January 2.
Jay is one of Florida’s biggest and oldest oil fields with 93 active wells, according to data on the Florida DEP website.
But other producing fields are also found in the Panhandle. One is Blackjack Creek, which Exxon discovered in 1972 and is now operated by Petro Operating Company; it produced about 270 b/d in September 2012. Another is Raccoon Point, which produces just under 1,300 b/d and is operated by small operator Calumet Florida, DEP records show.
South Florida is another relatively large oil production area, at least by local standards. The main trend in South Florida is Sunniland that spreads over the southwest Everglades. DEP’s site lists five fields there that were collectively producing just over 2,000 b/d in September 2011, the most recent reporting month.
But Garrett said that is a far cry from years past, when Calumet Florida brought in a Raccoon Point well whose production debuted at 3,000 b/d. “That brought a resurgence of South Florida production in the late 1990s,” he said.
More recently, as crude prices lifted in the mid-to-late 2000s, operator interest in the region picked up, Garrett said. “We had a bunch of new drilling, mostly horizontal wells trying to exploit what was left in South Florida fields,” he said.
The Baker Hughes rig count lists Florida as having two rigs active in the state for the week ended January 4. Garrett said a third rig is preparing to drill in southern Florida in a few weeks.
According to the American Oil & Gas Historical Society, the first recorded dry hole in Florida occurred in 1901 when two wells were drilled to 1,620 feet and 1,720 feet respectively. In the 1920s, other drilling attempts were made but were also dry holes. By 1939, prospectors had racked up almost 80 dry holes, the deepest at 6,180 feet.
Another entrepreneur switched directions and went sniffing around Florida’s Everglades, in the state’s southwest, drilling to just over 10,000 feet — but it too was dry. Then, according to Collier Resources, which owns leases at the Sunniland field in Collier County, Humble Oil (now ExxonMobil) discovered the Sunniland Trend in 1943.
Garrett said South Florida production is from much shallower Cretaceous reservoirs of 11,000-12,000 feet, whereas in the Panhandle the formations are Jurassic age and are deeper.
Sunniland has produced “something like 120 million barrels since 1943,” he said.
–Starr Spencer in Houston
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