American Oil and Gas Reporter - November 2018 - 41

Industry In Motion
We consider the likely maximum case to
correspond to a very optimistic drill rate.
On the other hand, the other two cases
are not unrealistic. The figure purposely
includes the past history of both Texas
and total U.S. output for historical perspective. To put these results into a world
perspective, if the basin reached the production rate ranges forecast for the mostlikely cases, it would rank fourth in the
world today among all countries, topped
only by Russia, Saudi Arabia and the
United States. Given the basin's current
production rate, the peak rates forecast
suggest that much more growth is plausible, placing further stress on elements
of the basin's infrastructure.
Other risk factors were considered,
but they did not affect the peak rate, only
the productive life. The risk factor affects
the productive life because it directly affects the ERR. The peak rate is independent of the ERR because the basin's
unconventional ERR is sufficiently large.
Table 1 shows tight oil ERR and the
total well requirement as a function of
oil price and risk factor, while Table 2
shows tight oil and total Permian peak
oil rates as a function of oil price and
peak drilling rate.
Several cases were considered beyond
those in Figure 4. The results of some
cases are summarized in Tables 1 and 2.

Table 1 shows tight oil ERR and the total
well requirement as a function of oil price
and risk factor. These results apply only
to the Midland and Delaware sub-basins,
and not to the entire basin. The tight oil
ERR ranges from 27 billion to 87 billion
barrels of oil. These ERRs are not a function of the drilling pace. They are consistent
with the ranges of technical recoverable
oil estimated by the USGS in 2016 and
2017, IHS Markit in 2017, and others for
different areas and sub-zones of the basin.
The well requirement ranges from
99,000 to 397,000, depending on oil price
and probability. This well requirement
pertains to horizontal wells only, and is
based on a generic 5,200-foot lateral
length. Drilling wells with longer lateral
lengths will reduce the overall (generic)
well requirement.
Table 2 summarizes the expected tight
oil and total Permian peak oil rates as a
function of oil price and drilling pace.
The drilling pace is characterized in terms
of its peak number of annual wells drilled.
The peak unconventional oil rate ranges
between 3.1 MMbbl/d and 6.5 MMbbl/d,
depending on the oil price ($70-100/bbl)
and drilling aggressiveness. The peak
total Permian Basin oil rate ranges between
3.7 MMbbl/d and 6.0 MMbbl/d, depending
on the drilling aggressiveness for the case
of $70/bbl oil.

FIGURE 4
Permian Basin Oil Production Forecast for Three Possible Scenarios
Tight Oil Permian
Conventional Permian
Texas
Permian Total, $100/bbl, Most-Likely Case
U.S.
Permian Total, $70/bbl, Most-Likely Case
Permian Total, $100/bbl, Likely Maximum

10.0

9.0

U.S.

8.0

Past

MMbbl/d

7.0

$100/bbl
Likely Maximum
Case

Future

$100/bbl
Most-Likely
Case

6.0

5.0

4.0

Texas

3.0

Permian
Tight Oil

2.0
1.0

0.0

$70/bbl
Most-Likely
Case

1950

1960

1970

1980

1990

2000

2010
Year

2020

2030

7
6

5

4

3

2

1

Permian Basin
1940

8

2040

2050

2060

2070

0

These results show that the peak rates
are indeed a function of the oil price and
drill rate, and only a slight function of
the risk factor. The productive life increases
with ERR. Figure 4 illustrates the productive life for the three cases shown.
For the most-likely case of $100/bbl oil,
for instance, the life of the basin extends
to 2065 before rates fall below 1 MMbbl/d.
The productive life for cases other than
those in Figure 4 easily can be estimated
based on the ERRs in Table 1 and peak
rates in Table 2. For many plausible cases,
the basin's life extends beyond 2060
before rates fall below 1 MMbbl/d. r
MARK WALSH is a consulting
reservoir engineer in Austin, Tx. He
has more than 35 years of experience,
starting his career with Amoco Production Co. and later serving as a
professor of petroleum engineering at
Texas A&M University. Walsh also
has been principal advisor at Gaffney,
Cline & Associates, chief reservoir
engineer at Wapiti Energy, and project
manager at the Bureau of Economic
Geology at the University of Texas at
Austin. He has a B.S. in chemical engineering from the University of Illinois
at Urbana, an M.S. in chemical engineering and a Ph.D. in petroleum engineering from the University of Texas
at Austin.
LARRY LAKE holds the Shahid and
Sharon Ullah endowed chair in petroleum and geosystems engineering at
the University of Texas at Austin. His
research areas include integrated reservoir characterization, geostatistics,
reservoir engineering and enhanced
oil recovery. He is a recipient of the
Society of Petroleum Engineers Distinguished Service Award and a member
of the National Academy of Engineering.
Lake is a past SPE distinguished lecturer. He previously worked for Shell
Oil Company. Lake holds a B.S. in
chemical engineering from Arizona
State University and a Ph.D. in chemical
engineering from Rice University.
NOVEMBER 2018 41



American Oil and Gas Reporter - November 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - November 2018

Contents
American Oil and Gas Reporter - November 2018 - Intro
American Oil and Gas Reporter - November 2018 - 1
American Oil and Gas Reporter - November 2018 - 2
American Oil and Gas Reporter - November 2018 - Contents
American Oil and Gas Reporter - November 2018 - 4
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