Lots of geoscience remains to be done in the Permian Basin of West Texas and southeast New Mexico. Plenty of Permian prospects remain to be analyzed.
And that might seem a little strange.
Production from the basin began more than 100 years ago. The Permian is one of the most explored and drilled regions of the United States. But somehow, this long-time oil and gas producing area has once more emerged with new promise.
Diamondback Energy hammered that point home again in February when it announced a $26-billion deal with Endeavor Energy Resources LP to combine their Permian Basin resources.
Once the deal closes, Diamondback expects to have 816 million barrels of oil equivalent production per day and around 838,000 net acres. That includes approximately 6,100 prospective drilling locations with break-evens below a $40 a barrel West Texas Intermediate oil price.
It was just the latest move in a sweeping Permian Basin consolidation. Last year, ExxonMobil agreed to buy Pioneer Natural Resources for more than $60 billion. Occidental Petroleum then announced its acquisition of privately held CrownRock LP for $12 billion.
All of that activity aims at building substantial positions in the Midland Basin area of the Permian, where Endeavor Energy’s horizontal drilling operations focused on Martin, Howard, Midland, Glasscock, Upton and Reagan counties of West Texas.
Unconventional resources development brought new exploration life to the Permian Basin by 2010, earning it designation as a super basin. But that was only the first phase of the basin’s resurgence.
During the following decade it became the mainspring of increased U.S. oil production, with most of the new crude output coming from the prolific Spraberry, Wolfcamp and Bone Spring formations, according to the U.S. Energy Information Agency.
Expanding Interest
Today, “you continue to see development of the Wolfcamp and the Leonardian sections” in the Permian, said Tim McMahon, tight oil resource assessment project manager and principal investigator for the Bureau of Economic Geology at The University of Texas at Austin.
“Certainly, those have been of interest for some time, but we see some interest now in expanding that, going up into the Avalon (formation) in the Delaware Basin,” he noted.
The Barnett formation below the Wolfcamp also has drawn attention recently, this time for oil production potential. That play now spreads over several counties in West Texas, in the Midland Basin. And “there’s been some discussion: Do some of the Pennsylvanian rocks have potential in the deep basin?” McMahon said.
Above the Leonardian, “you also see some things going on in the Guadalupian section,” in the Delaware Mountain Group, Artesia Group and San Andres, he noted.
Other Permian operators are targeting transition zone development, “where you get a lot of water but also a lot of oil,” McMahon said.
“This is on the Central Basin Platform within the San Andres formation and includes both transition zones and residual oil zones. Companies are drilling horizontal wells to extract oil from the transition zone on the formation, usually using (enhanced oil recovery) techniques as well,” he observed.
“This has been going on since at least the mid-2010s, but shows how application of unconventional technologies can be used to produce additional hydrocarbons from older conventional fields,” he added.
Ongoing Geoscience
Through its history, Permian exploration has demanded new rounds of geoscience. The Conventional Permian Basin lasted from about 1920 to 1970 and was analyzed using conventional interpretations.
As production went into decline, the Mature Conventional Permian emerged. Recovery geology and engineering began to dominate, until roughly 15 years ago. Then the Unconventional Permian Basin appeared, requiring a new approach.
Thirty years ago, Permian operators might dismiss formations that were too shaly or tight or wet. Today, some of those same formations are targets for development. In addition to recent work in the Barnett, potential zones of interest include the Avalon, Canyon, Clear Fork, Cline, Glorieta, Morrow, San Andres, Woodford, Yates and Yeso formations.
Diamondback Energy had earlier reported evaluating two shale intervals within the Clear Fork for potential horizontal development, while noting that conventional pay intervals in the Pennsylvanian Strawn and Atoka formations could add significant reserves.
“I know there are people looking at the Avalon in the Delaware Basin and they may be looking at the equivalent Clear Fork in the Midland (Basin),” McMahon said.
“Clear Fork is one of the areas where the nomenclature gets really weird,” he added.
Disparity in stratigraphic nomenclature is nothing new in the U.S. Midcontinent region. In the Permian Basin, part of the issue involves the change from shelf to basin facies, McMahon said.
“The Middle and Upper Clear Fork on the Northwest Shelf and CBP are supposedly the time-equivalents of the Lower and Middle Spraberry in the Midland Basin, with the Glorieta equivalent to the Upper Spraberry,” he noted.
“However, you will see the interval above the Upper Spraberry – we use Upper Leonard for this – sometimes referred to as Lower Clear Fork shale, with Glorieta and Upper Clear Fork above the Middle Leonard,” he added.
In the Pennsylvanian section, the Wolfcamp D designation is commonly used within the industry, “but stratigraphic nomenclature would have that as the Cline shale. Below that, the Cisco may be locally named Tannehill, Croton or Stockwether, with similar local names within the Strawn,” McMahon said.
“These changes make it difficult when mapping on a regional scale, which is a key component in evaluating resource potential and the focus of my group’s research,” he said. “Where you still need some work is sorting out the stratigraphy as you go from the deep basin to that upper shelf,” especially with steep sides to an uplift.
Ongoing work for geoscientists in the Permian includes deciphering the basin’s thermal maturity, which McMahon described as “challenging.”
“The thermal history’s a little bit unusual,” for instance in the Delaware Basin, where the deepest zones may have been the hottest, he noted.
“It does appear to be uplifted, possibly tilted, and how does that affect how we look at it?” he said.
There’s also the question of nailing down reservoir and play extent: “These things in the Permian Basin don’t always have great lateral connectivity in the reservoirs. You may have it, and you may not,” McMahon said.
And as always, results may vary. The Third Bone Spring sand in the Delaware Basin has been targeted for development but its Midland Basin equivalent, the Dean formation, doesn’t draw as much attention, McMahon noted.
“The Dean might not be as good as the Third Bone Spring sand, which is the equivalent but might not have the same degree of prospectivity,” he said.
In development drilling, the Permian has seen the same shift to longer laterals as other unconventional areas. So-called “horseshoe laterals” extend from a well then make a 180-degree turn and double back, to create a parallel lateral.
“Operators have been experimenting with new development techniques. People are starting to drill U-shaped wells (in the Permian), with the idea that you get more lateral in the area you’re drilling,” McMahon said.
Investments and Acquisitions
While the Midland Basin has gotten most of the recent attention and investment, operators continue to eye other prospect areas in the Permian, particularly in the less drilled and developed Delaware Basin.
The Delaware is typically defined as including all or parts of oving, Winkler, Ward, Reeves and Pecos counties in West Texas and Eddy and Lea counties in southeastern New Mexico, although parts of adjacent counties are sometimes included.
McMahon said his agency had created a comprehensive, color-coded chart of wells drilled in the Permian by year.
“You’ve got a lot more blank space in the Delaware (Basin). Even where it’s been drilled, the density isn’t as great,” he said.
In U.S. oil production, an obvious and maybe inevitable 2024 headline would read, “The Permian Basin Re-emerges -- Again.” Because of the basin’s status as an exploration and production hot spot, companies have found it hard to put together any meaningful Permian acreage position without buying another operator.
McMahon said he knows of one company from outside the United States that made a substantial effort to build a position in the basin, but ultimately was forced to give up. That bodes even more consolidation to come, with deeper pockets and deeper expertise driving future Permian Basin development.