American Oil and Gas Reporter - PBIOS 2016 Official Program Guide - 119

Permian Basin Reports

Firms Focus On EOR, Traditional Zones
By Danny Boyd
Special Correspondent
Driven by the emergence of the Wolfcamp, Spraberry, Bone Spring and other
resource plays, the Permian Basin is the
global hot spot for unconventional oil
and gas development. But while the conventional pay zones that put the Permian
on the oil map nearly a century ago may
be overshadowed by high-potential resource plays, they certainly have not gone
anywhere.
Over the years, Midland-based Legacy
Reserves LP has used its conventional
Permian acreage position to expand into
the Rocky Moluntains, East Texas and
the Mid-Continent, boosting daily production to 45,000 barrels of oil equivalent
a day from interests in more than 12,000
wells, says Chief Financial Officer Dan
Westcott.
Today, the Permian-born company
continues to rely on its core Permian
properties producing from traditional oil
formations while also targeting the Bone
Spring, Spraberry and Wolfcamp, he
says.
"The Permian has been the gift that
keeps on giving," remarks Westcott.
"Across the entire industry, oil and gas
companies' capital deployment is focused
on the Permian because it is the basin
with the best economics and best opportunities. It is hard to imagine that many
of the fields producing today were started
in the 1940s or even earlier, and companies
still are working them, and at the same
time are finding huge new reserves in resource plays."
Legacy Reserves' Permian interests
were assembled through more than 95
acquisitions completed since the company
went public in 2007, he says. "Name a
Permian county or Permian reservoir,
and we likely have production there,"
Westcott quips. "The majority of our producing assets in the basin are mature oil
wells that also produce high-Btu casinghead gas with significant natural gas
liquids content."
Through the second quarter, Legacy
had spent the majority of its $37 million
2016 capital budget in the Permian on
workovers and horizontal development
under a development agreement with an

affiliate of TPG Special Situations Partners
that covers 6,000 net acres, he reveals.
In addition to drilling, recompletion
and capital workover projects in conventional geologic formations, the company
has drilled and completed 12 horizontal
wells in resource plays since September
2015. That includes one horizontal in
southern Reagan County, Tx.; five in Lea
County, N.M., targeting the first, second
and third Bone Spring; and six in Howard
County, Tx., targeting the lower Spraberry
and Wolfcamp A.
While the company does not divulge
individual well initial productivities, Westcott says the results of its horizontal program have been very encouraging. "We
are really pleased with our well results
and would put them up against anybody's,"
he concludes.
Large Legacy Fields
Houston-based Kinder Morgan CO2
Company continues to invest in developing
a broad inventory of enhanced oil recovery
projects in some of the largest legacy
fields in the basin, says Darrell Ricketson,
chief operating officer at Kinder Morgan
CO2 Company.
This year, Kinder Morgan is spending
about 6 percent of an $3.3 billion capital
budget on CO2 oil recovery, including
targeting additional reserves at SACROC,

where, on average, the company injects
1 billion cubic feet of CO2 a day to
produce 30,000 barrels of oil and 21,000
barrels of natural gas liquids a day from
the Canyon Reef, a pay initially tapped
by wildcatters on Texas' Eastern Shelf in
the 1920s.
"We are continuing with the carbon
dioxide flood development project, and
we are going back through the field working redevelopment opportunities using
bypassed pay and infill techniques to
maximize recoveries from this field, which
includes 3 billion barrels of original oil
in place," Ricketson says.
Discovered in 1926, the Yates Field,
consisting of 26,000 acres about 90 miles
south of Midland, remains a key producer
in Kinder Morgan's EOR program, with
the company targeting reserves from pays
with an estimated 5 billion barrels of
OOIP, he says. Traditionally productive
from the Grayburg Dolomite and San
Andres formations, Kinder Morgan celebrated its Yates field's 90th anniversary
this year.
"It was a nice anniversary for us,"
Ricketson says. "Yates is producing 19,000
bbl/d, and it is supported by CO2 injection
and horizontal drilling. We expect to continue drilling and injecting CO2 for many
years to come. We also expect to test
other EOR techniques, such as surfactants

Kinder Morgan's CO2 enhanced oil recovery projects include some of largest legacy
fields in the Permian Basin, such as the SACROC, Yates, Katz and Goldsmith projects.
Its newest CO2 flood is Tall Cotton in Gaines County, Tx., the industry's first green-field
ROZ project, which now is producing approximately 1,500 barrel of oil a day.

OCTOBER PBIOS 2016 119



Table of Contents for the Digital Edition of American Oil and Gas Reporter - PBIOS 2016 Official Program Guide

Table Of Contents
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