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January 2013 Editor's Choice

Technology And Innovation Are Keys To Success In Emerging Tight Oil Plays

By Al Pickett Special Correspondent

Tulsa-based Laredo Petroleum is one of the leaders in the Permian Basin’s Cline Shale with 142,000 acres in northern Reagan, Glasscock and southern Howard counties, Tx. The company says its acreage is pro­spective in multiple zones: the Cline, and the Lower, Middle and Upper Wolfcamps.

Cline Shale

The story of the remarkable growth in the Permian Basin has been stacked pays. First, it was the vertical Wolfberry wells that fractured and commingled the Spraberry and Wolfcamp formations, as well as multiple zones below the Wolfcamp.

Then operators began drilling horizontal wells in the Bone Spring and Avalon Shale in the Delaware Basin in far West Texas and southeastern New Mexico. Next, companies turned the drill bit on its side in the Wolfcamp Shale, in some areas drilling horizontal wells in the same region in which they had been drilling successful vertical Wolfberry wells.

Now, the Cline Shale is sparking excitement on the Permian Basin’s eastern flank. The Lubbock Avalanche-Journal reported on Nov. 29 that “hopes are high for (developing) the Cline Shale in West Texas, with some lofty estimates suggesting the Cline could be the biggest oil play in U.S. history. Based on test well results, estimates are the Cline may contain 3.6 million barrels of recoverable oil per square mile and 30 billion recoverable barrels for the entire play.”

Only time will tell whether those grandiose predictions are accurate, but Randy Foutch, chairman and chief executive officer of Tulsa-based Laredo Petroleum, says he is thrilled to be one of the leaders in the Cline, especially since his company’s 142,000 acres in northern Reagan, Glasscock and southern Howard counties, Tx., have the potential for horizontal drilling in both the Cline and Wolfcamp.

“That is what excites us,” exclaims Foutch. “When we bought this acreage, we developed the theory that there were multiple horizontal zones. The Cline, which is currently the deepest, and the Lower, Middle and Upper Wolfcamp are all overlapping. Now that we have production from a number of wells–33 in the Cline, 16 in the Upper Wolfcamp and a couple in the Lower and Middle Wolfcamps–we have found our theory is real.”

He says Laredo has completely derisked its vertical Wolfberry program. “We also have derisked 70,000 acres in the Cline and 60,000 in the Upper Wolfcamp to date,” Foutch adds. “The rest has a good chance of being derisked, and that doesn’t even count the Middle and Lower Wolfcamp. This has huge potential.”

Perfecting The Technology

Laredo Petroleum was the first to drill horizontal wells in the Cline, according to Foutch, after acquiring acreage in 2008. “We cored our wells in 2009 and we got great 3-D seismic,” he explains. “We have more than 700 vertical wells, and 250 were drilled deep. If you would have told me five years ago that I had 3,500 vertical wells to drill with a decent rate of return and repeatability, and I would be trying to drill as few as possible, I would have told you that you were crazy.”


But that is what horizontal drilling in the Cline and Wolfcamp has done. Foutch says the big question is how far east the Cline Shale play will extend. Some predict it could go as far as Abilene, Tx., approximately 100 miles east of Laredo’s acreage.

“We bought our acreage in a specific window, about 80 miles long and 20 miles wide,” Foutch offers. “We like our acreage block, but that is not reflecting on what else is there.”

He says Laredo began drilling 4,000-foot laterals with 10-stage completions, but then the industry recognized the need for longer laterals. Laredo now is drilling 7,000- to 7,500-foot laterals with 24-26 frac stages.

“The EURs of these wells are still confusing,” Foutch acknowledges. “We report only crude oil and natural gas, but not NGLs. Our long-lateral wells are making 600-900 boe/d on an initial 30-day average.”

Laredo is running three to four horizontal rigs and four to six vertical rigs on its acreage, although Foutch says the number of rigs is less important to capital expenditures than it used to be because two-thirds of the cost is stimulation.

The ability to drill and fracture long-reach laterals may be the most significant developments in the history of the industry, according to Foutch, especially on its acreage, where Laredo has established four horizontal zones. “We know we have a 1,300- to 1,800-foot section of producible shale oil in four zones,” he claims. “That is dramatically more than anything else out there. That is pretty significant.”

Laredo Petroleum is drilling 7,000- to 7,500 foot laterals in the Cline Shale and completing with 24-26 frac stages. The company reports wells making 600-900 barrels of oil equivalent a day on an initial 30-day average.



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