American Oil and Gas Reporter - June 2014 - 120

SpecialReport: Hot Spots: Permian Basin
The basinwide rise of horizontal drilling
in tight oil plays has helped drive surging
oil output, which the Texas Railroad
Commission reports averaged more than
1 million barrels a day in 2013 (up nearly 300,000 bbl/d from five years earlier).
In the first three months of the year, the
RRC says, 2,212 new drilling permits were
issued for the 38 Texas counties in the
basin, with increasing numbers of new
wells and re-entries alike making the
turn to horizontal.
"Absolutely, that is the trend," agrees
David Godsey, senior vice president of geology and exploration for Energen Resources Corporation, based in Birmingham, Al. "The entire basin has seen the
number of wells drilled horizontally increase dramatically. Sixty percent of the
wells our company will drill in the Permian Basin this year will be horizontal. When
you look at production rates, the horizontal wells are really superior," Godsey
adds.
Paradigm Shift
While horizontal drilling has been a key
component of developing shale plays
across North America, including the Barnett, Marcellus/Utica, Bakken, Eagle Ford
and others, that was not necessarily true
in the Permian Basin. Vertically drilling

stacked pays in what was initially called
the Wolfberry (commingling the Spraberry, Wolfcamp and other, deeper zones)
kicked off the boom that the Permian Basin
is enjoying still today, more than decade
since the Wolfberry was "discovered."
But now, companies active there indicate, horizontal drilling in the Wolfcamp
Shale and the potential of the Cline Shale
play in the Midland Basin, as well as horizontal drilling in the Wolfcamp and
Bone Spring zones in the Delaware Basin
on the far west side of the Permian Basin,
have caused a paradigm shift in West
Texas.
Horizontal drilling combined with the
vertical Wolfberry play, vertical drilling in
traditional conventional zones, and enhanced oil recovery projects using waterfloods and carbon dioxide injection in legacy fields, have pumped the nation's largest
and most prolific basin into a remarkable
growth spurt.
Although the Permian Basin has produced nearly 30 billion barrels of oil
since the region's first discovery in the
1920s, experts claim that much or more oil
is still recoverable. The RRC reports the
state's daily production has topped 2 million barrels a day, up a whopping 33 percent in the past two years. Most of that
growth is attributable to the Permian

Basin and Eagle Ford in South Texas.
"We saw the Permian Basin as the
largest oil field in the United States, with
well-established reservoirs and multiple
drilling objectives-both conventional and
unconventional-and providing the potential for growth," says Fred Callon,
chairman and CEO of Callon Petroleum
Company, which entered the Permian
Basin five years ago.
The growth of the Permian Basin also
has led to rapid expansion of midstream
infrastructure, ranging from transmission
lines and gathering systems to natural gas
processing facilities.
"It is nice to see legacy fields have such
a resurgence," lauds Michael Latchem,
managing director and CEO of the Lucid
Energy Group LLC, which has corporate
headquarters in Dallas and a field office
in San Angelo, Tx., near the company's
primary focus area in the Midland Basin.
Rangeland Energy has begun constructing a crude oil and fracture sand terminal near Loving, N.M., to serve the
Delaware Basin.
"We are very bullish on the Delaware
Basin," emphasizes Rangeland President
and CEO Chris Keene from the company's
Sugar Land, Tx., headquarters. "The Permian Basin is divided into three areas: the
Central Basin; the Midland Basin, which
has gotten so much attention with its five
stacked pay zones and horizontal Wolfcamp play; and the Delaware Basin on the
far west side, which often was considered
the stepchild. But that is changing. There
are up to eight pay zones in the Delaware
Basin. Drilling is booming, and we are
planted right in the heart of it."
Turning Horizontal

Fort Worth-based Approach Resources has 160,000 acres in
Crockett and Schleicher counties, Tx., on the Permian Basin's
southeastern edge. After drilling
600 vertical gas wells in the
Canyon, Strawn and Ellenburger zones, Approach launched its
horizontal drilling program in
the Wolfcamp Shale in 2011.

120 THE AMERICAN OIL & GAS REPORTER

Fort Worth-based Approach Resources
has 160,000 acres in its Pangea and
Pangea West projects in Crockett and
Schleicher counties, Tx., on the basin's
southeastern edge, notes Craft.
He says Approach drilled 600 vertical
gas wells in the Canyon, Strawn and Ellenburger zones between 2004 and 2009.
"We were a gas company prior to 2009,"
he remarks.
Approach did its first Wolfcamp test,
the Cinco Terry No. 1301, in 2006, and
Craft says the company was off and running in a new direction, beginning its eval-

American Oil and Gas Reporter - June 2014

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