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Will massive shale play herald a new West Texas oil boom?

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Written by Asher Prince

Click HERE to Read the Article by the Publisher.


Today there’s no sweeter spot than here, in a patch of West Texas so flat that a person standing on a tall man’s shoulders could see to the horizon, above the shrubby brush that counts for trees in this part of the world.

This part of northern Crockett County– the nearest city is Ozona, about 18 miles to the south — is on the southern edge of the Wolfcamp Shale play, deemed this week by federal officials to have the kind of bounty oil executives dream about.

The U.S. Geological Survey says the Wolfcamp formation holds 20 billion barrels of oil in multiple layers of shale – the single largest U.S. unconventional crude accumulation ever assessed.

At current prices, the play might be worth $900 billion.

p1010682  The Wolfcamp formation also contains an estimated 16 trillion cubic feet of natural gas and 1.6 billion barrels of natural gas liquids, the agency determined.

The discovery is nearly three times larger than the shale oil found in 2013 in the Bakken and Three Forks formations in the Dakotas and Montana, said Chris Schenk, a Denver-based research geologist for the agency.

James, operations superintendent for Approach Resources, one of the companies that has focused on Wolfcamp, finds himself so busy that he returns home to McAllen for only four or five days every month or two.

He oversees the company’s 180 horizontal wells in this region. Each runs about 6,000 feet deep before running roughly 10,000 feet horizontally. Production runs from about 150 barrels to 400 barrels a day.

But the government report isn’t exactly Spindletop-quality news within the oil industry, with oil prices depressed and production ebbing in Texas and across the country.ut-land-drilling-rig_1

Roughly half the horizontal drilling rigs in the U.S. are doing work in West Texas, much of them in the Wolfcamp formation, said T. Grant Johnson, president of Houston-based Lone Star Production, which has mapped out some of the drilling possibilities.

“What makes this unique is that there are not one or two layers, but four or five – it’s a real layer cake of opportunity,” Johnson said.

Wildcatters and major energy players have been tapping the Permian Basin in West Texas for roughly a century. But it’s thanks to drilling innovations that the Wolfcamp is now open for business.

The federal announcement gives an imprimatur on the resiliency of the Permian Basin, an energy-rich area that stretches from just south of Lubbock to south of Midland and into southeastern New Mexico.

Ken Medlock, director of an energy studies program at Rice University in Houston, said it seems “likely that we’re seeing the birth of a new Permian Basin.” The advent of horizontal drilling, hydraulic fracturing and other advancements will allow for the removal of shale oil at a volume that will make the basin “the dominant onshore platform for oil production,” he said.

“Even in areas that have produced billion of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz, coordinator for the geological survey’s energy resources program.

web_wolfcamp-shale-formation_1In a sign of the resource’s richness, such companies as Apache Corp., ConocoPhillips, and Concho have been expanding operations in the region despite the slump in oil prices.

Gas prices are “not hospitable, but the vastness of the resources, and the efficiency of operators make it one of the few projects still profitable,” said Ross Craft, CEO of Approach Resources, which has 126,000 acres of land under lease in the Wolfcamp formation and has been drilling there since at least 2009.

A stick in the fight

The Geological Survey’s report could play into coming political, environmental and energy conflicts.

The Wolfcamp reserves “allows us to have a stick in the fight with the Middle East,” said Craft. “It evens the playing field.”

Oil imports have fallen off during the Obama administration, but energy independence remains a kind of holy grail, promised by presidents since at least as long ago as Nixon.

Still, the price slump has bedeviled companies.

In Big Lake, not far from this rig, unemployment has risen from 2 percent to just over 7 percent, according to Gloria Baggett of the Big Lake Economic Development Corp.

Even Approach Resources has cut a third of its staff, from 150 employees at its height a few years ago to just over 100 today.

There are a number of factors that will determine how quickly oil is extracted from the Wolfcamp Shale, experts said, but it will likely take years before any significant amount is gathered. The rate of production largely depends on technology, the cost to drill and oil prices.

While the speed of production remains a question mark, what Medlock doesn’t doubt is the economic benefit that will follow.

“The revival of the Permian Basin is going to last a couple of decades,” he said.


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Written by Asher Prince

Click HERE to Read the Article by the Publisher.

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