American Oil and Gas Reporter - April 2018 - 50

VISION2020
PERMIAN POWER PLAYER
There are some two dozen "super basins"
Q: around
the world, but the Permian appears
to be in a class of its own. The basin's story seems
almost too good to be true, with daily oil output
now exceeding the historic peak rates of the early
1970s. What sets the Permian apart as an operating
province? As a top-tier producer, what lessons has
Pioneer learned through its experience over the
years about the basin's productive capacity?
DOVE: The Permian Basin is in a class of its own and a
game-changer for the state of Texas, the United States, and the
world's energy supply for several reasons.
First, in terms of areal extent, the size of the three primary
producing regions of the Permian (the Delaware Basin, the
Central Basin Platform and the Midland Basin) is approximately
300 miles long and 400 miles wide. This 75,000-square-mile
area is roughly the equivalent of the entire state of South Dakota.
Second is the number of productive intervals. Most shale
plays typically have up to three producing intervals, but the
Permian Basin has a dozen intervals totaling more than 4,000
feet of productive shale, and all have been drilled successfully
and proven productive. So, if you take the areal extent and the
number of intervals, it is nearly the size of the entire country of
Mexico. This is why the Permian Basin is truly the pacesetter
of shale plays and cannot be replicated anywhere in the world.
Lastly, Pioneer's technology and innovation have advanced
greatly. When we began drilling horizontal wells and pumping
multistage hydraulic stimulations, everything changed. Some
zones that were not originally thought of as productive have
been quite productive and lucrative. We do not drill dry holes
anymore; today, we are really "exploring for economics." As
we have tested longer laterals, higher concentrations of proppant,
fluid and more fracture stages, the wells have continued to
improve. I feel 2017 was really a tipping point for the development
and deployment of technology in the Permian, and 2018 is
where technology is really taking off. Technology will be the
caveat when it comes to pushing productivity and well performance
higher, as well as improving efficiencies in the field.

Pioneer's lineage traces to West Texas in the
Q: early
1980s. While the Permian always has
been integral to its strategy, the company expanded
at various times into multiple North American basins
and even into Alaska and deep water and international regions. Now you are coming full circle and
refocusing as a pure Permian player. Why has the
company decided to divest of non-Permian assets?
What does that mean for Pioneer's long-term strategy? How do you summarize the biggest opportunities on your leasehold?
50 THE AMERICAN OIL & GAS REPORTER

DOVE: When you have one of the largest acreage positions
in the best shale play in the world, everything else you own is
effectively "noncore," and it simply cannot compete for capital.
Don't get me wrong: Our asset in the Eagle Ford is a companymaker for someone, just not Pioneer, given our position in the
Permian Basin.
Long term, Pioneer has announced a 10-year plan to grow
from 240,000 to 1 million barrels of oil equivalent a day, and
we are actively executing on that plan. We have more than
20,000 drilling locations in the Permian Basin and plan to drill
approximately 250 wells in 2018.
We maintain one of the strongest balance sheets in the
industry, and we are well positioned to drill high-return wells in
the years to come. Through 2026, we expect to deliver compound
annual oil production growth of more than 20 percent.

Pioneer understands as well as anyone the
Q: power
of technology in the value creation
process. Considering technology's steady progression in the Spraberry and Wolfcamp trends over
the past several years, what specific technologies
do you think will be most important through 2020,
especially as you begin developing new benches/intervals or moving outside defined core areas?
DOVE: As noted, I believe 2017 was really a tipping point
for technology adoption in the industry, and I anticipate it
taking off even more in 2018.
Historically, you would not have seen a correlation or connection between the oil patch and Silicon Valley. Today,
technology is more critical than ever, and we are seeing start-up
tech companies knocking on our door with technology that can
significantly improve our field operations.
Specifically, I'm referring to technologies that are going to
allow us to cut costs and grow while simultaneously allowing
us to develop truly scalable initiatives that will enable us to
improve our margins and bottom line. This includes big data,
artificial intelligence, automation, Internet of Things, advanced
robotics, bots, augmented reality and natural language processing
technologies.

Five years ago, Pioneer was drilling vertical
Q: Spraberry
wells on single-well pads. Take us
five years into the future in the Midland Basin. How
will the subsurface architectures be laid out and
what do you envision for the corresponding surface
facility designs? What are the engineering challenges
in fully developing this stacked-pay environment
to maximize recoverable reserves?
DOVE: Pioneer has developed cutting-edge drilling advancements that will allow us to drill, complete and produce
within areas where a series of pads and supporting shared infrastructure has been established, with minimal to no deferred
production.

American Oil and Gas Reporter - April 2018

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