American Oil & Gas Reporter - December 2011 - 60

SpecialReport: Permian Basin Activity Update
“We are approaching 1970s production numbers,” he adds. “I think our future production rate will return to 1.5 million to 2 million bbl/d. That implication is really positive when you think about how many jobs and how much economic growth will be generated by the increased production.” Operators are finding a new bounty of oil drilling targets all across the massive 102,000 square-mile basin in West Texas and southeastern New Mexico, from unconventional geology previously drilled through on the way to deeper conventional reservoir targets, to giant untapped reserves in the residual oil zone beneath the historic oil-water boundary in carbon dioxide floods. “There has not been a better time to be in the Permian Basin,” offers John Christmann IV, Permian region vice president for Apache Corp. “Technology is at an inflection, and there are plenty of attractive drilling and investment opportunities. The biggest challenge is controlling costs.” The dramatic increase in Permian Basin activity comes on several fronts. First, there is the Wolfberry play in the heart of the basin. Operators, beginning with Henry Petroleum almost a decade ago, have been drilling vertically through the traditional Spraberry trend target down to the Wolfcamp and other zones below the Spraberry, using massive hydraulic fracs to stimulate each formation. Production from each zone then is commingled. The Permian also offers traditional oil plays, including the Yeso on the New Mexico Shelf, as well as enhanced oil recovery operations using waterfloods and CO2 injection to squeeze even more oil out of mature fields in the Clearfork, San Andres and other formations. In some cases, horizontal drilling has been introduced, bringing another new dynamic to a basin that has been producing oil and natural gas since the early 1920s. And now there is a burgeoning new play in the Delaware Basin, a region of far West Texas, as well as Lea and Eddy counties in southeastern New Mexico, where the region’s newest play goes by several names, but most commonly is called the Bone Spring Shale. Independent operators are targeting multiple zones, using horizontal drilling and hydraulic fracturing in a play that has some marveling at its potential. “There are several research reports estimating 30 billion barrels of recoverable oil equivalent in the Delaware Basin alone, based on early results,” Leach enthuses. “That is amazing when you realize the entire Permian Basin has produced a little more than 30 billion barrels since the early 1920s. The Yeso and Wolfberry are factory-like operations now, but we are in the early innings of the Bone Spring play.” Expanding Presence Apache greatly expanded its presence in the Permian Basin in 2010, with the $3.1 billion acquisition of BP’s Permian assets as well as its merger with Mariner Energy, giving the company more than 3 million lease acres and net daily production of 91,000 barrels of oil equivalent, 68 percent of which is oil and natural gas liquids, according to Christmann. He says last year’s two major acquisitions were the culmination of a 20-year expansion for Apache into the Permian Basin, which began with a 1991 acquisition. Apache continued to grow its position over the next two decades by acquiring assets from Texaco, Exxon Mobil, Hess, Anadarko and Marathon before last year’s deals with BP and Mariner. “If you look at Apache around the world and the 10 major areas in which we are involved, we want a presence size that matters,” Christmann contends. “The Permian Basin is an oil-rich province with long-lived oil reserves. And the technology is there to find more hydrocarbons.” Thanks to its merger with Mariner, Apache is especially active in Glasscock County, Tx., on the eastern flank of the Wolfberry play. Christmann, however, notes the company’s activity in Glasscock County really is a Wolfcamp play because the Spraberry does not extend that far to the east. It is the same technology, however, that is being used in the Wolfberry: drilling vertical well bores into the Wolfcamp and then to other zones below, such as the Fusselman, Strawn and Cline. He says Apache is drilling to a total depth of 11,000 feet on average. “It is vertical drilling, with both conventional and unconventional reservoirs,” he reports. “We also are starting to drill some horizontal wells in Glasscock County. We just drilled our fourth horizontal well and completed our third horizontal in the Cline. We are encouraged by the possibilities with horizontal wells.” Apache is running 24 rigs total in the

Permian Basin Rig Count and Oil Production

Permian Basin daily oil production peaked at 2 million bbl/d in 1973, with the rig count peaking between 400 and 500 rigs in 1981. The basin then experienced a sustained production decline of 3 percent a year, falling to 1 million bbl/d by the mid-2000s. However, the development of tight oil plays with horizontal drilling and multistage hydraulic fracturing technology has reversed the trend lines, with 440 rigs working in the basin in October and oil production again trending upward. With continued activity in the Wolfberry, Bone Spring and other plays, Permian oil production eventually is expected to once again approach 1970s levels. Source: Concho Resources, with data from PI/Dwights, U.S. Energy Information Administration and RigData.

60 THE AMERICAN OIL & GAS REPORTER



Table of Contents for the Digital Edition of American Oil & Gas Reporter - December 2011

American Oil and Gas Reporter 12/11
Contents
Reports
Calendar
Oil & Gas Counts
State Legislative
Industry Digest
Tech Connections
Washington Watch
Keystone XL
Liaison Committee
Shale Gas Subcommittee
Endangered Species
Midstream Startups Emerging to Meet Booming Demand
Liquids Resource Plays Have Oil Production Rising Again
Organizers Anticipating Big Things for 2012 PBIOS
Cover Story
R&D Areas Key to Improving Fracturing
Natural Gas Offers Solutions as Transportation Fuel
Completion Design, Frac Modeling Optimize Eagle Ford Wells
Novel Drill-In Fluid Excels in Horizontal ERD Wells
Technologies Optimize Sand Control
Operators Must Manage Risk Before, During and After Drilling
OCS Access: BOEM Offers Business-as-Usual OCS Leasing Plan
Court Finds for Insurers in Gulf Spill Ruling
OIPA
Clean Air Act
IOGA NY
COGA
IPAA Annual
Louisiana
West Virginia
Pennsylvania
Texas
The American Well Servicing Directory, Winter 2011
Industry Focus
Classified Advertising
Advertisers Index
American Oil & Gas Reporter - December 2011 - American Oil and Gas Reporter 12/11
American Oil & Gas Reporter - December 2011 - Cover2
American Oil & Gas Reporter - December 2011 - Contents
American Oil & Gas Reporter - December 2011 - Reports
American Oil & Gas Reporter - December 2011 - 5
American Oil & Gas Reporter - December 2011 - 6
American Oil & Gas Reporter - December 2011 - 7
American Oil & Gas Reporter - December 2011 - Calendar
American Oil & Gas Reporter - December 2011 - 9
American Oil & Gas Reporter - December 2011 - 10
American Oil & Gas Reporter - December 2011 - 11
American Oil & Gas Reporter - December 2011 - Oil & Gas Counts
American Oil & Gas Reporter - December 2011 - 13
American Oil & Gas Reporter - December 2011 - Industry Digest
American Oil & Gas Reporter - December 2011 - 15
American Oil & Gas Reporter - December 2011 - 16
American Oil & Gas Reporter - December 2011 - 17
American Oil & Gas Reporter - December 2011 - 18
American Oil & Gas Reporter - December 2011 - 19
American Oil & Gas Reporter - December 2011 - 20
American Oil & Gas Reporter - December 2011 - 21
American Oil & Gas Reporter - December 2011 - 22
American Oil & Gas Reporter - December 2011 - 23
American Oil & Gas Reporter - December 2011 - 24
American Oil & Gas Reporter - December 2011 - 25
American Oil & Gas Reporter - December 2011 - 26
American Oil & Gas Reporter - December 2011 - 27
American Oil & Gas Reporter - December 2011 - 28
American Oil & Gas Reporter - December 2011 - Tech Connections
American Oil & Gas Reporter - December 2011 - 30
American Oil & Gas Reporter - December 2011 - Washington Watch
American Oil & Gas Reporter - December 2011 - Keystone XL
American Oil & Gas Reporter - December 2011 - 33
American Oil & Gas Reporter - December 2011 - Liaison Committee
American Oil & Gas Reporter - December 2011 - 35
American Oil & Gas Reporter - December 2011 - 36
American Oil & Gas Reporter - December 2011 - 37
American Oil & Gas Reporter - December 2011 - Shale Gas Subcommittee
American Oil & Gas Reporter - December 2011 - 39
American Oil & Gas Reporter - December 2011 - Endangered Species
American Oil & Gas Reporter - December 2011 - 41
American Oil & Gas Reporter - December 2011 - Midstream Startups Emerging to Meet Booming Demand
American Oil & Gas Reporter - December 2011 - 43
American Oil & Gas Reporter - December 2011 - 44
American Oil & Gas Reporter - December 2011 - 45
American Oil & Gas Reporter - December 2011 - 46
American Oil & Gas Reporter - December 2011 - 47
American Oil & Gas Reporter - December 2011 - 48
American Oil & Gas Reporter - December 2011 - 49
American Oil & Gas Reporter - December 2011 - 50
American Oil & Gas Reporter - December 2011 - 51
American Oil & Gas Reporter - December 2011 - 52
American Oil & Gas Reporter - December 2011 - 53
American Oil & Gas Reporter - December 2011 - 54
American Oil & Gas Reporter - December 2011 - 55
American Oil & Gas Reporter - December 2011 - 56
American Oil & Gas Reporter - December 2011 - 57
American Oil & Gas Reporter - December 2011 - Liquids Resource Plays Have Oil Production Rising Again
American Oil & Gas Reporter - December 2011 - 59
American Oil & Gas Reporter - December 2011 - 60
American Oil & Gas Reporter - December 2011 - 61
American Oil & Gas Reporter - December 2011 - 62
American Oil & Gas Reporter - December 2011 - 63
American Oil & Gas Reporter - December 2011 - 64
American Oil & Gas Reporter - December 2011 - 65
American Oil & Gas Reporter - December 2011 - 66
American Oil & Gas Reporter - December 2011 - 67
American Oil & Gas Reporter - December 2011 - 68
American Oil & Gas Reporter - December 2011 - 69
American Oil & Gas Reporter - December 2011 - 70
American Oil & Gas Reporter - December 2011 - 71
American Oil & Gas Reporter - December 2011 - 72
American Oil & Gas Reporter - December 2011 - Organizers Anticipating Big Things for 2012 PBIOS
American Oil & Gas Reporter - December 2011 - Cover Story
American Oil & Gas Reporter - December 2011 - 75
American Oil & Gas Reporter - December 2011 - 76
American Oil & Gas Reporter - December 2011 - 77
American Oil & Gas Reporter - December 2011 - 78
American Oil & Gas Reporter - December 2011 - 79
American Oil & Gas Reporter - December 2011 - 80
American Oil & Gas Reporter - December 2011 - 81
American Oil & Gas Reporter - December 2011 - 82
American Oil & Gas Reporter - December 2011 - R&D Areas Key to Improving Fracturing
American Oil & Gas Reporter - December 2011 - 84
American Oil & Gas Reporter - December 2011 - 85
American Oil & Gas Reporter - December 2011 - 86
American Oil & Gas Reporter - December 2011 - 87
American Oil & Gas Reporter - December 2011 - 88
American Oil & Gas Reporter - December 2011 - 89
American Oil & Gas Reporter - December 2011 - 90
American Oil & Gas Reporter - December 2011 - Natural Gas Offers Solutions as Transportation Fuel
American Oil & Gas Reporter - December 2011 - 92
American Oil & Gas Reporter - December 2011 - 93
American Oil & Gas Reporter - December 2011 - 94
American Oil & Gas Reporter - December 2011 - 95
American Oil & Gas Reporter - December 2011 - Completion Design, Frac Modeling Optimize Eagle Ford Wells
American Oil & Gas Reporter - December 2011 - 97
American Oil & Gas Reporter - December 2011 - 98
American Oil & Gas Reporter - December 2011 - 99
American Oil & Gas Reporter - December 2011 - 100
American Oil & Gas Reporter - December 2011 - 101
American Oil & Gas Reporter - December 2011 - 102
American Oil & Gas Reporter - December 2011 - 103
American Oil & Gas Reporter - December 2011 - 104
American Oil & Gas Reporter - December 2011 - 105
American Oil & Gas Reporter - December 2011 - 106
American Oil & Gas Reporter - December 2011 - 107
American Oil & Gas Reporter - December 2011 - 108
American Oil & Gas Reporter - December 2011 - 109
American Oil & Gas Reporter - December 2011 - 110
American Oil & Gas Reporter - December 2011 - Novel Drill-In Fluid Excels in Horizontal ERD Wells
American Oil & Gas Reporter - December 2011 - 112
American Oil & Gas Reporter - December 2011 - 113
American Oil & Gas Reporter - December 2011 - 114
American Oil & Gas Reporter - December 2011 - 115
American Oil & Gas Reporter - December 2011 - 116
American Oil & Gas Reporter - December 2011 - Technologies Optimize Sand Control
American Oil & Gas Reporter - December 2011 - 118
American Oil & Gas Reporter - December 2011 - 119
American Oil & Gas Reporter - December 2011 - 120
American Oil & Gas Reporter - December 2011 - 121
American Oil & Gas Reporter - December 2011 - Operators Must Manage Risk Before, During and After Drilling
American Oil & Gas Reporter - December 2011 - 123
American Oil & Gas Reporter - December 2011 - 124
American Oil & Gas Reporter - December 2011 - 125
American Oil & Gas Reporter - December 2011 - 126
American Oil & Gas Reporter - December 2011 - 127
American Oil & Gas Reporter - December 2011 - 128
American Oil & Gas Reporter - December 2011 - OCS Access: BOEM Offers Business-as-Usual OCS Leasing Plan
American Oil & Gas Reporter - December 2011 - Court Finds for Insurers in Gulf Spill Ruling
American Oil & Gas Reporter - December 2011 - 131
American Oil & Gas Reporter - December 2011 - 132
American Oil & Gas Reporter - December 2011 - OIPA
American Oil & Gas Reporter - December 2011 - 134
American Oil & Gas Reporter - December 2011 - 135
American Oil & Gas Reporter - December 2011 - Clean Air Act
American Oil & Gas Reporter - December 2011 - 137
American Oil & Gas Reporter - December 2011 - IOGA NY
American Oil & Gas Reporter - December 2011 - 139
American Oil & Gas Reporter - December 2011 - 140
American Oil & Gas Reporter - December 2011 - 141
American Oil & Gas Reporter - December 2011 - 142
American Oil & Gas Reporter - December 2011 - 143
American Oil & Gas Reporter - December 2011 - COGA
American Oil & Gas Reporter - December 2011 - 145
American Oil & Gas Reporter - December 2011 - 146
American Oil & Gas Reporter - December 2011 - IPAA Annual
American Oil & Gas Reporter - December 2011 - 148
American Oil & Gas Reporter - December 2011 - 149
American Oil & Gas Reporter - December 2011 - 150
American Oil & Gas Reporter - December 2011 - 151
American Oil & Gas Reporter - December 2011 - Louisiana
American Oil & Gas Reporter - December 2011 - 153
American Oil & Gas Reporter - December 2011 - 154
American Oil & Gas Reporter - December 2011 - 155
American Oil & Gas Reporter - December 2011 - West Virginia
American Oil & Gas Reporter - December 2011 - 157
American Oil & Gas Reporter - December 2011 - Pennsylvania
American Oil & Gas Reporter - December 2011 - Texas
American Oil & Gas Reporter - December 2011 - 160
American Oil & Gas Reporter - December 2011 - The American Well Servicing Directory, Winter 2011
American Oil & Gas Reporter - December 2011 - 162
American Oil & Gas Reporter - December 2011 - 163
American Oil & Gas Reporter - December 2011 - 164
American Oil & Gas Reporter - December 2011 - 165
American Oil & Gas Reporter - December 2011 - 166
American Oil & Gas Reporter - December 2011 - 167
American Oil & Gas Reporter - December 2011 - 168
American Oil & Gas Reporter - December 2011 - 169
American Oil & Gas Reporter - December 2011 - 170
American Oil & Gas Reporter - December 2011 - 171
American Oil & Gas Reporter - December 2011 - 172
American Oil & Gas Reporter - December 2011 - 173
American Oil & Gas Reporter - December 2011 - 174
American Oil & Gas Reporter - December 2011 - 175
American Oil & Gas Reporter - December 2011 - 176
American Oil & Gas Reporter - December 2011 - 177
American Oil & Gas Reporter - December 2011 - 178
American Oil & Gas Reporter - December 2011 - 179
American Oil & Gas Reporter - December 2011 - 180
American Oil & Gas Reporter - December 2011 - 181
American Oil & Gas Reporter - December 2011 - 182
American Oil & Gas Reporter - December 2011 - 183
American Oil & Gas Reporter - December 2011 - 184
American Oil & Gas Reporter - December 2011 - 185
American Oil & Gas Reporter - December 2011 - Industry Focus
American Oil & Gas Reporter - December 2011 - 187
American Oil & Gas Reporter - December 2011 - 188
American Oil & Gas Reporter - December 2011 - 189
American Oil & Gas Reporter - December 2011 - 190
American Oil & Gas Reporter - December 2011 - 191
American Oil & Gas Reporter - December 2011 - Classified Advertising
American Oil & Gas Reporter - December 2011 - 193
American Oil & Gas Reporter - December 2011 - Advertisers Index
American Oil & Gas Reporter - December 2011 - Cover3
American Oil & Gas Reporter - December 2011 - Cover4
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