• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 7 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Does Toyota Know Something That We Don’t?
  • 5 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 2 days World could get rid of Putin and Russia but nobody is bold enough
  • 1 day America should go after China but it should be done in a wise way.
  • 5 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 4 days China is using Chinese Names of Cities on their Border with Russia.
  • 5 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 4 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 10 days huge-deposit-of-natural-hydrogen-gas-detected-deep-in-albanian-mine
  • 5 days Putin and Xi Bet on the Global South
  • 5 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 6 days United States LNG Exports Reach Third Place
  • 6 days Biden's $2 trillion Plan for Insfrastructure and Jobs

Breaking News:

U.S. Crude Oil, Gasoline Inventories Boom

Will OPEC Increase Production?

Will OPEC Increase Production?

Even though the IEA cut…

U.S. Drillers Pump The Brakes

U.S. Drillers Pump The Brakes

The total number of active…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Does The Permian’s Sweet Spot Hold 8 Times More Oil Than Predicted?

What with all the rig additions, land deals, and low breakeven costs, the Permian basin has been the subject of much love from the oil industry as of late, and recently revised estimates are now showing that the Permian holds a whole lot more oil than previously thought.

Horizontal drilling and technological breakthroughs of the past decade have made the U.S. shale industry a force to be reckoned with, but they have also prompted the U.S. Geological Survey to start re-assessing how much technically recoverable continuous (unconventional) oil and gas resources lie in today’s hottest shale play—the Permian.

The latest USGS assessment, conducted in May, shows that the Spraberry Formation of the Midland Basin in the Permian holds technically recoverable resources of 4.2 billion barrels of oil and 3.1 trillion cubic feet of gas.

The previous assessment, published in 2007, had put a mean estimate of 510 million barrels of oil in the Spraberry Formation. But ten years ago, the assessment was based on historical production from vertical wells, the USGS said in this month’s survey.

“Since 2007, multiple intervals within the Spraberry have been targeted with horizontal drilling,” the USGS noted.

Advances in fracking technology were the reason why the USGS revised upwards its estimates for technically recoverable resources at Spraberry. Shale drillers now have more sophisticated technology, well data, and experience than they did 10 years ago.

“Technology was a reason to go in and look at an area with a fresh set of eyes,” research geologist Stephanie Gaswirth told Midland Reporter-Telegram in a telephone interview.

“The jump is similar to the situation with the Wolfcamp,” Gaswirth noted. Related: Iraq Agrees With Deal Extension, But Boosts Oil Exports To Record Levels

In November last year, the USGS published an assessment of oil reserves for the Wolfcamp shale in the Midland Basin of the Permian, revealing the largest estimate of continuous oil that the agency has ever assessed. The USGS estimates that the West Texas shale formation could hold an estimated mean of 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids.

The USGS is also conducting a continuous assessment of the Delaware sub-basin, and first results are expected in 2018, Gaswirth told Midland Reporter-Telegram.

Meanwhile, the rise of U.S. shale output, which started at the end of last year, is set to continue. And it’s mostly a Permian story.

According to the EIA’s latest Drilling Productivity Report, total oil production from the seven most prolific U.S. shale regions is expected to rise by 122,000 bpd in June over May, to reach 5.401 million bpd. The Permian will account for more than half of that increase, with output in this West Texas region seen up by 71,000 bpd on the month. Related: Tight Supply Boosts Natural Gas Prices In 2017

With oil prices much higher than last year’s lows, companies drilling in the Permian are increasing capex this year as they are re-focusing on growth, Wood Mackenzie said in an analysis in March. While some internationally focused majors are still sticking to capital discipline and cutting capex, upstream companies with exposure to the US Lower 48, the Permian in particular, plan to grow investments and production, according to WoodMac.

As far as production breakeven prices are concerned, Rystad Energy said in March that Permian Midland slashed average wellhead breakeven prices from US$71/barrel in 2014 to US$36/barrel in 2016, effectively realizing a 49-percent decrease, the highest among all main U.S. shale oil plays.

ADVERTISEMENT

The latest USGS assessment for the technically recoverable oil at Spraberry shows a dramatic jump in estimates. But it remains to be seen how much the potential tapping into those resources would cost drillers, and would technological breakthroughs make extracting more resources at the formation economically profitable. This, of course, will depend most of all on the price of oil.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News