Madisonville East Texas, United States
The Madisonville (Rodessa) Field is located 100 miles north of Houston in Madison County, Texas. GeoPetro's ownership in the Madisonville Field includes a 100% working interest in four production wells drilled to the Rodessa formation at 12,000 feet of depth, a 100% working interest in an injection well and 12.5 square miles of 3-D seismic data.
The Madisonville Field is an anticline with 5,800 acres of closure at the Rodessa limestone at about 11,800 feet of depth. A 3-D seismic program shot in early 1998 confirmed the size of the structure and slightly increased its size over earlier interpretations. Based on logs and gas flow data that measure reservoir characteristics, the Rodessa formation reservoir appears to have very high permeability. The Company believes this favorable permeability level will ensure high productivity rates and allow drainage of the virtual "horizontal well" network created by nature.
The Madisonville Field was discovered in 1945 with the Boring # 1 well, which was drilled to the Rodessa formation. The well reportedly encountered gas accumulations in the Rodessa formation, but due to the presence of hydrogen sulfide in the Rodessa gas, these "sour gas" reserves were left undeveloped. The Madisonville Field was developed in the shallower zones, where sweet gas as well as oil was discovered. Over 125 wells have been drilled over the last fifty years and production in these shallower zones continues to this day.
In 1994, nearly 50 years after the Boring # 1 well was drilled, United Meridian Corporation (UMC), drilled the UMC Ruby Magness # 1 well to the Rodessa zone, as the first follow-up well to the Boring # 1. The Ruby Magness well had 139 feet of net pay in the Rodessa, but the gas was also found to be "sour gas", containing 28% of impurities. UMC production tested the well through perforations in the lower most ten feet of the indicated Rodessa pay interval. The well tested at a water free rate of 12 million cubic feet per day from this limited interval on a 22/64ths inch choke, with flowing wellhead pressures increasing from 3915 to 3919 pounds per square inch.
In 2000, the Company acquired a 95.3125% working interest in the UMC Ruby Magness # 1 well and certain leases in Rodessa Zone of the Madisonville Field. The Company has since increased its working interest to 100% in the UMC Ruby Magness # 1 well and adjacent leases which cover depths from the top of the Rodessa formation and deeper. In order to capitalize on these proven reserves, the Company developed an onsite plan to treat the Rodessa's sour gas and remove the impurities in order to meet pipeline quality specifications. The Company entered into a definitive agreement with Hanover Compression Limited Partnership, a subsidiary of an NYSE listed company, which committed to fund, construct and operate a dedicated natural gas treatment plant to process the Rodessa natural gas. The terms of the Hanover agreement called for the construction and installation of a natural gas treatment plant by Hanover at the Madisonville Field with an initial capacity sufficient to treat and bring up to pipeline quality specifications at least 18 million cubic feet of gas per day. The agreement also provided for the installation by Gateway Processing Company, of field gathering pipelines and an approximately nine-mile sales pipeline with an estimated capacity in excess of 60 million cubic feet per day, to be used for transporting the Madisonville gas to market. The agreement represented a major capital commitment by Hanover and Gateway of approximately $30 million to the Madisonville Project.
For its part, under the agreement the Company was required to re-complete the existing Ruby Magness Well for production from the Rodessa formation interval, and provide an injection well for disposal of waste gas from the treatment plant. GeoPetro finalized the re-completion operations of the Ruby Magness in October 2001 and then perforated a 139-foot interval in the Rodessa formation. The well was production tested over a 12-day period. on various choke sizes, with flowing rates reaching approximately 20.8 million cubic feet of gas per day, with a wellhead flowing pressure of 2,910 PSIG. Shut-in bottom hole formation pressure at the Rodessa formation level is estimated at approximately 6,048 PSIG.
The injection well was approved by the Texas Railroad Commission and then completed by the Company in October of 2002. Following the construction and installation of the natural gas treatment plant and related pipeline and gathering facilities by Hanover and Gateway, production from the Ruby Magness Well commenced in May 2003. Cash flow to the Company from the project commenced in July 2003.
The first development well, the Fannin Well was successfully drilled and completed in 2004. The Company owns 100% working interest in the Fannin Well. A total of 146 feet of indicated pay was perforated in the well and a flow test of the well was completed in December 2004 from the Rodessa Formation. Production commenced from the Fannin Well in early 2006. In 2006, the Company drilled the Wilson and Mitchell wells in which it owns a 100% working interest.
In July, 2005, Madisonville Gas Processing LP ("MGP") purchased the natural gas treatment plant from Hanover and purchased the gathering pipelines upstream of the gas treatment plant from Gateway. Concurrent with MGP's purchase of the gas treatment plant and gathering pipelines, the Company entered into a new agreement, (the "MGP Agreement"), to treat and transport gas production from the Madisonville Project.