Trends in exploration are moving away from new ventures and refocusing on proven basins – most likely inspired by the success of the Permian Basin.
The Permian’s astounding second life has led to an increase in eight years of resources – from 36 billion barrels of oil equivalent to 122 BBOE, according to the U.S. Geological Survey. It has delivered a record number of hydrocarbons through unconventional means – 4.5 million MBOE per day in 2019 – and has prompted many operators to return to mature basins with anticipation of similar revivals.
The Permian Basin is now known as a “super basin,” which is defined by a minimum of 5 BBOE in proven resources and a multiple of that remaining, along with multiple and often stacked petroleum systems.
The Permian has become a beacon of hope for Latin America and South America, which are now known to have substantial super basin potential as well. Their emerging status will be discussed at AAPG’s International Conference and Exhibition in Buenos Aires, Argentina on Aug. 30 in a forum called “Super Basins of Latin America.” The forum is organized by AAPG members Charles A. Sternbach and Chandler Wilhelm.
“A miracle happened in North America, and that was the Permian Basin,” said Sternbach, AAPG past president and chair of the Super Basin ad hoc committee – created by Sternbach and Wilhelm to address next steps and challenges for promising Latin and South American basins.
With the application of horizontal drilling and multi-stage, hydraulic fracturing technology, the Permian Basin, “went from producing less than 1 million barrels a day to more than 4 million barrels a day in a decade – roughly from 2007 to 2018,” Sternbach said.
After examining both underground and above-ground conditions of mature basins in Latin America and South America, including Vaca Muerta in Argentina, offshore Brazil, La Luna-sourced basins in Colombia, and Tampico-Misantla in Mexico, AAPG Member Bob Fryklund, chief strategist for upstream at IHS Markit, has identified 10 super basins and established a rating system designed to determine the potential for each based on both geology and overall political climate.
“We are not just looking at conventional versus unconventional, but the basin as a whole, or the basin as an ecosystem,” Fryklund said, adding that another key factor in changing exploration trends has been the issue of timing to first oil. (New ventures in frontier basins typically take seven to nine years to monetize, yet unconventional resources can be monetized within roughly a year.)
In terms of underground characteristics, Fryklund is looking at richness per square mile and the presence of multiple petroleum systems and clinoforms, to name a few. Above-ground conditions include government stability, investor-friendly environments, presence of a local workforce, competitiveness of contracts, existing infrastructure and environmental regulations.
Fryklund believes several of the 10 super basins in Latin and South America could become the next Permian Basin.
“The last four years have been Latin America’s burst again in terms of the most resources discovered and added,” he said. “It’s been a big bright spot. Outside of North America, that’s where all the resources have been added.”
When he heard about the relatively new concept of a “super basin,” AAPG Member Carlos Macellari, senior adviser for Tecpetrol, said he was “skeptical” at first.
“But they are very unique basins,” he said.
Macellari, who is working to develop Vaca Muerta as an unconventional play, is in the heart of what might be the next super basin to come on line. Close to 14 BBOE have been discovered to date in the Neuquén Basin, originated from four different source rocks. However, Vaca Muerta holds an unconventional potential of twice this amount, Macellari said. Vaca Muerta is currently producing 82,000 barrels of oil and more than 1 billion cubic feet of gas a day, and these numbers are rapidly increasing.
After Argentina took measures to ensure stable contracts, fair labor laws and properly trained contractors, production took off. “The entire energy spectrum of the country has changed,” Macellari said. “Now we are thinking about exporting gas. We used to import it. We thought Argentina had peaked in 1998 for oil and in 2003 for gas, but with the rebirth of the Neuquén super basin, new production highs will be reached in the near future.”
In Brazil, oil and gas regulation has undergone changes that have allowed companies to access resources such as the presalt fields – helping to transform basins, such as the Santos, into super basin status. “Petrobras understands its role as a provider of technical knowledge for the country in order to encourage discussions on industry regulation and policies,” said AAPG Member Rogerio Cunha, exploration manager for Petrobras.
Following a period of intensive exploration, the Brazil presalt has transitioned into a development play, with an overall slowing of exploration activity as Petrobras focuses on developing this considerable and proven resource base. An increase in drilling activity is expected in the second half of 2019 and is expected to carry over into 2020, Cunha said.
He credits Brazil’s success to new exploratory models, better geological knowledge, new production concepts, improved seismic imaging, and “digital/cultural transformation, patience, resilience and persistence.”
The Cretaceous basins in Colombia, including the Magdalena River Valley, Catatumbo, Cesar, Maracaibo and Eastern Cordillera, show characteristics of a super basin as well, said Jorge Calvache, AAPG Member and vice president of exploration at Ecopetrol. Analyses show that even though more than 9 BBOE have been produced, there are still 30-70 BBOE remaining both onshore and in the country’s shallow and deep offshore basins. They are all sourced by the La Luna formation.
In addition, there is an opportunity for an unconventional play in Colombia, with volumes close to 7 BBOE.
“Ecopetrol is working on several initiatives to enhance the recovery factor of existing fields through the implementation of new EOR technologies, and efforts are being made to develop and implement innovative methodologies in seismic acquisition and processing to improve subsurface imaging,” he added.
Yet, the highway to active super basin status is not without roadblocks. Colombia is currently facing delays in its operational plans – mostly due to a circuitous permitting process and difficulties in obtaining social licenses to operate, Calvache said.
If the country can successfully pave a smooth way to production, its future looks bright. “After a century of exploration and exploitation of La Luna oil in Colombia’s traditional basins, the new knowledge of alternative Cretaceous hydrocarbon sources will keep mature basins active for a long time to come,” he said.
Primed for take-off, yet hampered by its current government, Mexico’s super basin status continues to wait in the wings.
Set aside for years in favor of the low-hanging fruit of the Campeche and Cantarell oil fields, the Tampico-Misantla super basin in northern Mexico holds an estimated 144 billion barrels of oil in place, said AAPG Member Alfredo E. Guzman, chief geologist for Mexico Petroleum Company and former executive vice-president of Pemex.
Very similar to the Permian Basin in resource volume and geology, the Tampico-Misantla Basin is sourced by one of the richest Upper Jurassic source rocks in the world and ideal for unconventional development.
Yet, Mexico now has a moratorium on horizontal drilling and hydraulic fracturing for environmental reasons.
Instead, the country is concentrating on the mature Southeastern Basin and offshore fields, which ironically have now become more expensive to develop than unconventional resources. “You can produce unconventional resources for $40 to $45 a barrel now,” Guzman said. “Very few people are aware of this, and it’s costing us. We are now starting to import oil.”
Until the policies of the country changes, the unconventional hydrocarbons of the Tampico-Misantla super basin will remain dormant.
Era of the Super Basin
Emphasizing the importance of both ideal underground and above-ground conditions to develop a super basin, Calvache said that the industry must step up and explain to those in power as well as to citizens why hydrocarbon exploitation must continue to receive support.
“Over the past decade, an increase in environmental regulation and social opposition to the oil industry have dramatically reduced investments in exploration and production activities. The tightening of these regulations is driven by stakeholders without regard to energy needs of a country,” he said.
“The oil and gas industry needs to become trustworthy and believable in the eyes of the common people, with educational campaigns that can reach all in simple language, explaining the scope of our activities, our best practices, and our commitment to the environment and to bring prosperity to the communities where we operate.”
In the meantime, the era of the super basin is here, with Latin America and South America on the closest horizon. After the “miracle” of the Permian Basin, Sternbach asks, “Which one will be next?”