This image from the United States Geological Society (USGS) dovetails the Berman (Supetra etal.; 2021) chart discussion elsewhere in Forum Stuff. It is a structure map on the top of the Wolfcamp formation in the Permian Basin. The grey area essentially outlines the entire Permian Basin which was included in the 2016 and 2018 USGS assessments of technically recoverable tight oil. The pink cores outlined in each sub-basin (Mike), represent 10-11 partial counties by areal extent and from these cores roughly 85% of ALL Permian tight oil production has been produced. There are an estimated 48,000 HZ wells in these cores, some of them drilled as close to together as 500 feet, lateral to lateral.
In the Midland Basin three benches produce roughly 75% of shale oil extracted in the sub-basin; in the Delware there are five productive benches that produced 90% of all production.
The pink cores do not represent the productive limits of each sub-basin, however, and some 6-8,000 additional wells have been drilled outside the cores, in less productive acreage that some people like to refer to as Tier 3/4 acreage. I sometimes refer to this flank acreage outside the cores as goat pasture.
The USGS recoverable resource assessments covered the entire Permian Basin outlined in the two images and placed enourmous technically recoverable tight oil resources everywhere, even as far north as Lubbock, and has messed with people's heads, badly. There are lots of people in the U.S. who want you to believe if its technically recoverable, its all going to come out of the ground, all it takes is more money.
The actual cores of the HZ shale oil play in the Permian represent approximately 20-25% of the assessment areas and productive limits, where wells have been drilled and found bascially no commerical shale oil, about 40% of the assessment area. The rest, where theoretical technically recoverable, as yet unfound resources lie, would not support a goat for 1 day. Lets call that Never-Never Land.
In their 2021 paper, Saputra etal predicts there can be 100,000 more HZ wells drilled in flank, Tier 3/4 acreage, outside the cores, and 21 G BO +/- more oil can be produced over and above the 16 G BO that has been produced from the cores. The authors even believe wells can be drilled in Never-Never Land and more shale oil produced. Yikes. No word on what the price of natgas would have to be to make THAT happen.
Again, thus far less than 15% of Permian shale oil has come from flank areas.
Core areas and sweet spots within those cores are "sweet" for a reason. They represent the best rock and the oil and gas business always drills its best stuff, first. As you can see in the structure map the lowest top of the Wolfcamp lies pretty much in the cores. A net isopach map would show the Wolfcamp correlative interval to be the thickest in the core, a function of deposition and how sediments washed into the basin and stacked, bottom up. The interval in the core has the best oil saturations, the highest initial GOR, better nanopermability, higher carbonate content, the best thermal gradients, total organic carbon and the lowest sulphur, nitrogen, etc. contents...everything in the core kitchens are perfect to cook and produce the most oil when hydraulically frac'ed.
Cores are where they make the highest volumes of oil and the most money. The mudstone (shale) down structure, in higher structural areas, is thinner, generally has higher water saturations and is much gassier. Nobody is anxious to drill Tier 3/4, non-core goat pasture at oil prices of less than $100 and $5 natgas, sustained. Given declining liquids productivity in the cores, rising GOR, rising WOR and obvious well inteference, if it was good in the goat pasture they'd be out there right now drilling the snot out of it.
About the two cores in the Permian....the shale sector doesn't call it low-grading, they call it high-grading. There is a reason for that.
Make NO mistake, this delay in investment in deepwater exploration is a direct function of the U.S tight oil, and tight gas pheonomena and one of several reasons that, in the long term, shale oil and shale gas may not prove to have been so wonderful for the U.S., afterall.
Shale sucked all the air out of the rest of the domestic oil and gas industry in America. It suffocated tens of thousands of small independent operators producing hundreds of thousands of barrels of BOE...the kind of stuff that was mostly paid for, and declines 3 % per year.
Orphaned wells, by the tens of thousands that need to be plugged? Had the shale phenomena not driven costs up, and prices down, those wells would still be an important part of America's oil future.
Shale oil, on the other hand, is heavily, heavily debt dependent and declines at the rate of +80% in the first 38 months of production life. $10MM dollar wells have to be drilled, one after another, non-stop, for it to be a viable source of energy for America. It, shale, put deep water exploration on hold, on standby, for the past decade awaiting price stability to move forward. Now, according to this article, its been put on hold, longer.
Guyana, Suriname, for example, is a complicated, long story of perseverance and lots of bucks. Thus far it has booked about 13 G BO of PDP reserves, But the basin is just getting explored. That 13 G BO of PDP reserves will be 2028 equal all the shale oil in America that has been exported to foreign countries. Why? Its better oil. All the oil discovered thus far from Guyana will cost 75% less, than all shale oil produced in the U.S. since 2007.
Shale is a speedbump in the road to depletion of our nations hydrocarbon resources. Too many people lie about its economic benefits, how many jobs it provides, its long term sustainability and the role it will play in our energy security.
We focused on the wrong thing in America. We focused on short term cash flow and not long term dependability.
Stick around just a few more years and you will see that I was right about all this.
This is a very current data set of GORs by a major HZ shale oil producer in the Midland Basin that is getting very nervous about remaining drillable locations. There are two things to see in this chart, one.) the rate of increase in GOR of wells drilled in 2023 and 2024. This operator's 'hood is in Midland and Martin Counties where I have already shown you both entire counties are in, or about to walk through the bubble point door to the other side, as evidenced by two.) year to year GORs for all wells this company has drilled in the sub-basin since the get-go. Gas goes up, liquid looses its drive mechansim to the well bore, begins to decline, gas wanders up for a while longer then eventually associated gas declines, as does GOR. Death is near.
Its dumb to look at the forrest and not see the trees. The "trees" are really big operators drilling the snot out of densely populated core areas. You can learn more from watching the big boys in their favorite spots (trees) than you can by looking at the big forrest. 87% of all Permian HZ shale production comes from clumps of trees in the forrest.
I think there must be some vertical Spraberry wells mixed in with this mess, acquired in leasehold transactions and/or mergers, none of which would have been drilled after 2012-2013. Some of the weird looking GOR spikes are likely algo hiccups.
There are three primary benches in this sub-basin and 2 more secondary-tertiary benches; a lot of this stuff is already drilled on <550 foot spacing and there are lots of domestic problems between children and parents.
When they can no longer drill monster wells (IP60-180) that are three miles long, because they are out of room, the Midland Basin is going to freak some folks out with how fast it falls.
0$/mmbtu! wow!
Just watched a combo-curve demo focused upon Midland Basin oil eur's per foot. Used 15,000 wells. P50 number 18 barrels per foot. That is scary. Kind of reminds you of the old joke about the preacher asking for people to confess their weekly sins "I wouldn't atold that one...". They are trying to sell their new software, might want to rent u-hauls for the layoff crowds instead.
Culberson County in the Delaware Basin is what I would call Tier 3 & 4 goat pasture. The N.E corner of it is OK but once you move west, and south, wells are no bueno por ca ca. Culberson is an example of the areas that are being relied for 100,000 more wells to be drilled and an additional 18 billion barrels of oil to be recovered from the Permian. Western Reeves is the same (Saputra etal; 2021). S.W Ward, Reeves and N.E Pecos County are out of the core and also Tier 3 & 4 country; Pioneer used to operate in Pecos County before it dumped it on Continental and Mr. Hamm.
Goat Pasture is tough for goats to make a living in, even harder to drill HZ wells in whose EUR's will supposedly be higher than in the cores because of longer laterals and technological advancements. (Saputra etal; 2021). Far western Eddy County is the same. Gasville,
I couldn't find the articles that had mentioned the fire, but found another in qcintel.
US Permian gas pipeline fractures after earthquake, fire contained
Hi Mike. I saw a couple articles mention that right after that quake a gas pipeline ruptured nearby. Other than a one sentence mention I can't seem to find any info. Do you know anything about additional damage from the quake?
I believe that makes seven 5.0 or more magnitude quakes in the Permian Basin since 2020.
Great post. Arguments are focusing. Water Disposal and remaining runway. Takes me back to the discussions on the Oil Drum in 2004/5ish regarding Ghawar.
I liked this stripper well economics video Mike, down to earth perspective https://www.youtube.com/watch?v=fC0zvefXfeQ
Hi,
A dumb question, if the permanent basin is getting exhausted.
How about shales in oklahoma, kansas or even New Albany shale in illinois/ indiana?
Regards
"less than $100 and $5 natgas"
I remember you writing these things even before COVID. Given currency debasement and tariffs I guess you should increase those estimates by 20-30%
"There are lots of people in the U.S. who want you to believe if its technically recoverable, its all going to come out of the ground,"
And a lot of these people want to call these "technically recoverable reserves" PUDs.
Great article Mike!
On Valentines Day Texas had a 5.0 earthquake in Reeves County, near Toyah and a sesimic response area (TRRC SRA) that has had numerous earthquakes over the past years. I am not a fan of the Texas Tribune but you can learn about it, here....
These earthquakes are not frac'ing related, they are releated to injecting some 21 billion barrels of produced were per day all across the Basin. This is causing faults to slip and the earth to shake. A 5.0 is a big one, wherever you live. Its just a matter of time before casing starts to part 20 miles and underground blowouts occur. Or a pipeline buckles. Wait, that already happend.
We're not making America great with this oil production, we're making the U.K., Singapore, Canada, Netherlands, South Korea and even China "great" by exporting 75% of Permian oil to those countries. The sacrifice, however, is all on Texas.