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Shale Oil: The Alpine High Discovery To Inspire More Shale Exploration In The Permian

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Written by Richard Zeits

Click HERE to Read the Article by the Publisher.


Summary

  • The Alpine High is the most notable prolific success in the Woodford Shale and Barnett Shale in the Permian.
  • However, these formations are present across the Delaware Basin and in fact had been tested in various areas, albeit with mixed results.
  • Apache’s Alpine High success is likely to inspire other operators to test or re-visit analogous play concepts in these two formations and, hopefully, could lead to additional commercial discoveries.

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The announcement by Apache Corporation of the Alpine High discovery adds an interesting new dimension to the exploration opportunity set in the Permian Basin. So far, activity in the Permian has generally gravitated towards the deeper portions of the Midland Basin and Delaware Basin. However, Apache’s success indicates that shallow areas (located in “alpine high” areas geologically) can also be quite prolific under certain circumstances.

In its presentation, Apache highlighted the unique petro-physical characteristics of its Alpine High find, hinting that the play’s concept may not be applicable to other areas. Still, Apache’s announcement is likely to inspire other operators’ exploration teams to take a harder look at the play’s analogues elsewhere. At the very minimum, operators with acreage in the immediate vicinity of the Alpine High may commit capital to delineate the play’s limits and possibly test productivity in the Barnett and Woodford in the “mid-mountain” and “low-mountain” areas. More interestingly, similar play concepts may be evaluated in other areas. In fact, there are reasons to believe that at least some exploration efforts in that direction have already been undertaken by other operators.

The following slide from Apache’s presentation illustrates the similarity of the depositional environment of the Alpine High play and those of the Woodford Shale in the Arkoma and Anadarko Basins.

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Another slide in the presentation suggests that the same play concept may not work as one goes east due to the increasing clay content which makes fracture stimulation ineffective.

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A natural question that comes to mind, however, is whether areas with a favorable depositional environment could be found to the north and northeast of the Alpine High play. Does the concept work in eastern Culberson County, Texas or in Eddy and Lea Counties of New Mexico, for example? Does it work further east, in Loving or Winkler Counties, Texas?

The key difference between Apache’s Alpine High find and potential opportunities in some of the other areas is, of course, Apache’s ability to build a massive acreage position at a very low cost. In areas like Lea County or Eddy County acreage in prospective areas is mostly leased up and operators controlling the acreage often have their hands full with multiple already discovered plays in the stack above the Woodford and Barnett.

That said, there are some signs that the industry continues to look at plays analogous to the Alpine High. For example, the following slide from Matador Resources’ presentation suggests that the company has tested the Barnett and Woodford. Please note that Matador is a relative newcomer to the Delaware Basin.

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QEP Resources drilled and completed in March of this year a horizontal Woodford Shale test in Winkler County (QEP’s “stealth play,” in my understanding in a joint venture with Eagle Oil). The well flowed with 416 barrels of oil and 420 Mcf of rich natural gas during the 24-hour test from a ~6,300 horizontal lateral and cumulatively produced ~18,000 barrels of oil in the first approximately three months online. Of note, Apache also has a well producing from the Woodford in Winkler County since 2011.

The same play has been previously tested by several other operators, including Chesapeake Energy, who drilled a well in the nearby Andrews County in 2011 (the well is currently operated by Maverick Operating).

The list can continue.

In Conclusion…

While the Alpine High is the most notable prolific success in the Woodford Shale and Barnett Shale in the Permian, the formations are present in the stack in many areas. In fact, a number of tests has been drilled in these formations in various areas of the Delaware Basin, albeit with mixed results.

Apache’s success is likely to inspire other operators to test or re-visit play concepts in these and other formations and could lead to new discoveries.


Tags: oil, natural gas, energy


Written by Richard Zeits

Click HERE to Read the Article by the Publisher.

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