Production and prospects continue to pour out of the greater Permian Basin-area of West Texas.
More than 20 years ago, development of the Barnett Shale in the Fort Worth Basin introduced the world to the practice of combining hydraulic fracturing with horizontal drilling. That became a history-making shale gas play. Today, operators are targeting the Barnett more than 300 miles to the west, in the Midland Basin, where the formation is deeper and oilier.
High Recovery, Low Breakeven
Occidental announced in December that it would acquire CrownRock LP for about $12 billion. In that deal, Oxy picked up roughly 94,000 net acres of stacked-pay assets it described as “well positioned alongside Occidental’s legacy Midland Basin business.”
It also got 170,000 barrels of oil equivalent per day of unconventional production and around 1,700 undeveloped locations. Of those, 750 locations are projected to have breakevens below a $40/barrel West Texas Intermediate oil price, the company reported.
Oxy added that the acquired position would enable the company “to build upon its deep horizon Barnett well performance leadership, in which new well production was 34 percent better than basin average.”
A recent release from energy analytics and information company Enverus Intelligence Research carried the headline, “The Barnett bonanza is coming.” Company research found Barnett wells in the Midland Basin have higher oil recoveries and lower breakevens than other secondary zones.
Emily Head, senior geology associate for EIR in Calgary, authored the firm’s new report on the Midland Basin Barnett. She said many operators have been seeking to add promising acreage or looking for an entry in the Permian, most targeting a sub-$50 WTI breakeven.
“High-quality inventory scarcity has been an issue over the past few years in the Permian Basin,” Head noted.
Geologic and Economic Factors
The Barnett seems to fit the bill. Notably, the Mississippian Barnett formation is generally high in kerogen with a high total organic content in the Lower Barnett play area. One key piece is the thickness of the high-kerogen shale, Head observed.
“That lower, high-kerogen, high-TOC shale is really indicative of a deepwater setting,” she said.
“Another key characteristic of the Barnett in the Midland is its depth,” typically around 11,000 feet, Head added.
That gives it vertical separation of more than 1,000 feet from the higher Wolfcamp D zone, making the Barnett an inventory expansion opportunity for operators with deep drilling rights in a stacked-play area.
“Here (in the Midland Basin) the Barnett is a zone that is vertically isolated right down the stratigraphic column. There’s no pressure communication that’s going to deter drilling there,” Head said.
Like its eastern cousin, the Barnett play in West Texas also produces natural gas, with more or less abundance depending on location. But the western Barnett has emerged as primarily an oil play.
“You’re going to have a gas component. On the average, we’ve seen 60-percent wellhead liquids” reported from tests in the Midland Basin Barnett, Head said.
Mike Party, then AAPG president, provided an early look at the emerging West Texas Barnett play in a presentation at an AAPG Super Basins conference in 2020.
In his description, Party said, “This is a fairly uniform formation … When you sit there and look at it, it’s easy to map, easy to do the isopachs. Those are markers you can tee off on.”
He said the “holy grail” for the play was understanding the thermal maturity picture, especially where the early uplifiting of the Central Basin Uplift produced “considerably cooler” conditions.
“This is pretty well documented, that as you move up on the platform you’re getting cooler, so you want to be on the edge of the platform,” he said.
Party said the Barnett section actually can be thicker in the Delaware Basin than in the Midland, but in the Delaware the thickest Barnett section deepens below 13,000 feet and can go much deeper.
“So you’re talking about extremely deep wells out there … which is a problem,” he noted.
Four years ago, drilling in the West Texas Barnett play took place mostly in Andrews and Ector counties, west of the city of Midland, but activity spread as operators extended testing. Enverus research found that Barnett wells drilled in the core of the Midland Basin have averaged slightly higher oil rates than those drilled near its edges.
“The farthest east test we have seen to date is in Glasscock County (east of Midland). It’s showing you that widespread tests are going on in the Barnett,” Head said.
The continued success of Permian Basin development is due partly to its geology and partly to the ingenuity of geoscientists and engineers, according to Tim McMahon at the Bureau of Economic Geology at the University of Texas-Austin.
“The Permian Basin contains numerous stacked source rock and reservoir intervals, and as drilling and completion technology has advanced, the source rocks have become the new reservoirs,” said McMahon, who is project manager and principal investigator for BEG’s Tight Oil Resource Assessment research consortium.
“Continuing advancements in both geologic understanding and development practices allow for new opportunities, even in a basin that has produced for over 100 years,” he noted.
Other prospective pay zones are under evaluation across the Permian Basin, where “the Woodford Shale is another play that is gaining attention” in West Texas, McMahon noted.
“The Woodford is one of the main unconventional reservoirs in Oklahoma and also underlies the Barnett in the Permian Basin. There may also be opportunities in looking at applying new developments in drilling and completions to older conventional fields,” he observed.
However, Head noted, the Woodford “may be overmature and gassier on the Midland (Basin) side.”
For operators with existing production in the Midland Basin, the Barnett can be an added option to oil output from the higher Wolfcamp. Where that possibility exists, holding deeper drilling rights is essential.
“You have to make sure you have the deeper rights where these deeper zones are viable. I’m not going to say they are viable all around the basin,” Head commented.
Deeper drilling does add expense to operations, an important consideration in the Barnett play where economics are a critical factor.
“Because it’s deeper it becomes a little more expensive – we’re estimating maybe 20-percent higher than (other development) we’re seeing in the Midland Basin proper,” Head noted.
With Barnett evaluation ongoing, Enverus plans to keep a close eye on the play as it spreads to other areas.
“It’s going to be something we continue to watch as it continues to be targeted in various parts of the Midland Basin,” she said.