An Overview of Champ Oil Company Operations in Kentucky & Tennessee
The Champ Oil Co., Inc. properties are located in southeastern Kentucky, western Kentucky and central Tennessee. These properties include approximately 172 wells, approximately 200 miles of gas pipeline, and approximately 30,000 acres of oil and gas leases. Current production from these properties averages 1,000,000 cubic feet of natural gas per day and approximately 20 barrels of oil per day. Oil production is expected to increase significantly with the installation of an EPA‐permitted injection well in the fall of 2015. Production is primarily from the Mississippian age Big Lime formation with minor production from the Williamsburg sand, Maxon sand, Borden formation, the Devonian age Chattanooga shale and the deeper Ordovician sediments.
Champ Oil Co. has operated successfully in this area for over thirty years and their experience has provided them with a reputation for consistent and cost‐effective drilling, completion and production practices. Champ is currently expanding their position with a continuing program of developmental drilling locations.
Kentucky and Tennessee have a rich history of oil and gas production with the first producing oil well drilled in 1818 in McCreary County in southeastern Kentucky. Development occurred in southern Kentucky prior to the Civil War but began statewide following the war. Early development in eastern Kentucky was primarily in the shallow Mississippian through Silurian sediments. While these formations produced oil in some areas (the shallow Big Sinking field has produced in excess of 100 million barrels of oil) most production has been natural gas. Early development in central Tennessee and Kentucky was in very shallow Mississippian formations and in the Ordovician age equivalent of the Trenton‐Black River. It was in this area that the Martin Beatty well was drilled in 1818 and the “Great American Well” of Cumberland County in 1829 that reportedly produced 50,000 barrels of oil from a depth of 171 feet. Western Kentucky also has a long production history from Pennsylvanian and Mississippian age formations. Many shallow reservoirs were developed in the early 1900’s and tar sands were mined where those reservoirs outcrop at the surface.
Later exploration has continued to develop the shallow reservoirs along with deeper targets. The Devonian shale produces natural gas throughout virtually all of eastern Kentucky and its equivalent – the Chattanooga shale in Tennessee and the New Albany shale in western Kentucky – have also become targets for development. Horizontal drilling in these shales has proven to significantly increase production and, even with low gas prices, drilling has continued in these formations. The New Albany of western Kentucky has recently been found to be oil productive and wells drilled there are being studied thoroughly in an effort to understand the reservoir characteristics.
Recently, several companies have drilled tests to the Cambrian age Rogersville shale in the Rome Trough of eastern Kentucky. Although the information on these wells is being held confidential, they have created significant interest in these deeper formations. It is estimated that the total lease bonuses paid in Lawrence, Johnson and Magoffin Counties, Kentucky now exceeds $60 million and the lease play is still active.
Champ Oil Company began drilling and producing in Whitley County, Kentucky in the late 1980’s. Production was primarily natural gas from the Mississippian age Big Lime formation from both conventional reservoirs and from fractured intervals. That development continued with additional production from the Devonian age Chattanooga Shale and scattered production from the deeper Ordovician age Trenton/Black River and Knox intervals. As development continued Champ’s pipeline system was expanded considerably and eventually included sales taps on both Delta Natural Gas and Citizen’s Gas pipeline systems.
Champ has recently expanded into Tennessee and the Illinois Basin of western Kentucky. This expansion into surrounding areas offers Champ significant upside potential and diversification into liquids‐based prospects outside of their historic gas producing developments.
Champ Oil Co is currently developing prospects in the Appalachian Basin of eastern Kentucky and Tennessee and in the Illinois Basin of western Kentucky. Many of the reservoirs are stratigraphic traps that are a result of depositional processes. The Kentucky prospects are in sediments that range in age from Pennsylvanian to Devonian. Pennsylvanian age channel sands are the target of drilling in Whitley and portions of McCreary County, Kentucky. Oolitic carbonate sands are found in the Mississippian age Big Lime of Whitley and McCreary counties in eastern Kentucky and in the St. Genevieve and McCloskey in Henderson and Hopkins counties in western Kentucky. Mississippian age channel sands are the target of drilling in Bell County, Kentucky.
In addition to the conventional reservoirs the Mississippian age Big Lime and Devonian age Chattanooga shale can also be productive from natural fracturing. Champ Oil has long and successful experience with these fracture reservoirs particularly in Whitley and McCreary counties.
The target of drilling in Tennessee is in Ordovician age sediments. These rocks, known regionally as the Trenton, Black River and Knox groups and locally known as the Sunnybrook, Stones River, Murfreesboro and Knox, have a long production history in central Kentucky and east‐central Tennessee. The primary target of drilling in this prospect is fracturing and alteration associated with a “solution collapse” feature. These are paleo cave systems may be related to Cambrian age faulting that occurred prior to deposition of the Devonian shale and are masked by later sediments. These reservoirs are difficult to find but can be prolific producers with several wells producing over 200,000 barrels from less than 1,500 feet of depth with no completion.
Virtually all prospecting in this area is based on subsurface mapping. Geophysical logs and, in some cases, driller’s logs are used to construct maps of depositional environments, reservoirs and structure. These techniques have proven very effective in these relatively shallow reservoirs where the rocks have little contrast and seismic exploration has not yet been proven successful.
Detailed descriptions can be found in the accompanying Development Summary for each prospect.
Overview: Champ Oil Co., Inc.
- Active since 1984
- Long‐time producer with 172 producing wells
- 200 miles of pipeline and gathering systems
- Currently developing liquids prospects in Appalachian and Illinois basins
- Six active prospect areas in Kentucky and Tennessee
|Champ Oil Development Areas|
- Proven producer with over 30 years experience
- Management, personnel, infrastructure in place
- Multiple prospects in two basins and two states
- All prospects based on sound geology with analog production
- Active drilling program in progress
- Leases in place for additional drilling with locations permitted and drill‐ready
Thomas W. Cate, PG
August 13, 2015