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Drilling raises some hope for return of Tuscaloosa Marine Shale oil


The drilling of a few oil wells in southwest Mississippi and the recovery of the price of crude have awakened hopes, however slight, of a revitalization of the Tuscaloosa Marine Shale “play.”

Prices plunged from about $100 in mid-2014 to the low point of around $40 by the end of that year.

But the price of West Texas Intermediate crude reached $76.91 last month, nearly a four-year high, though it has slipped since, settling on Tuesday at $62.21 on the New York Mercantile Exchange.

It will probably take a sustained price of $80 to $90 a barrel to support broader production out of the formation, said Bernel McGehee, who tracks the industry in the Tuscaloosa Marine Shale, which straddles southwest Mississippi and southeast Louisiana. McGehee operates a website, TMS Horizons.

About the time of the peak in prices in October, an Australian company announced it had started drilling three wells in Amite County, according to the Associated Press.

Australis Oil and Gas Ltd. plans to drill 10 wells in that part of the play and using an approach that “gets the top production at the lowest price out of these wells,” McGehee said in an interview.

“Nobody else, to my knowledge, is interested in the Tuscaloosa Marine Shale,” he said. Five companies were operating in the play as of 2016.

The formation is believed to have the potential of 7 billion barrels of oil.

The domestic industry was largely “victimized” by its own success through the revolutionary technology of hydraulic fracturing, or fracking, which in the past decade took the United States from dependence on foreign oil.

As recently as 2016, five companies were operating in the formation. And mineral-rights holders were still hopeful of realizing a handsome return on their holdings.

The oil that comes out of the TMS is actually “Louisiana Light Sweet” Crude, which is a very clean and costs less to refine,” McGehee said.

Thus, it sells for more on the market. Louisiana Light closed for $71.42 on Monday and West Texas Intermediate was $63.12, according to the U.S. Energy Information Administration, for example.

But it is also deeper that than other formations and is more costly to extract, than, say, West Texas Intermediate out of the Permian Basin, said McGehee.

He said that there has been some success in the Austin Chalk formation in Louisiana, which lies above the Tuscaloosa Shale formation, which could make the deeper play more feasible, including in Mississippi, by using the assets already in use on the ground.


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