geological survey - permian's bright future

PB Oil & Gas
The Permian Basin Petroleum Association Magazine

Permian Basin Industry Outlook

Geological Survey Paints Bright Future

The Permian Basin is alive and well with a bright future.
Listening to the national media, one might think the oil and gas industry in North America was on its last legs, with little or no new oil or natural gas being discovered. Nothing could be further from the truth.
In fact, the United States Geological Survey (USGS), in its most recent assessment of undiscovered oil and gas resources of the Permian Basin in West Texas and Southeastern New Mexico, estimated a mean of 41 trillion cubic feet (Tcf) of undiscovered natural gas and a mean of 1.3 billion barrels of undiscovered oil in the Permian Basin.
“That is a lot of oil,” said Curtis Schenk, project chief for the USGS. “There is tremendous potential in the Wolfberry,” the hottest new technological play in the Permian Basin that commingles the Spraberry, Dean and Wolfcamp formations.
Schenk explained that the most recent U.S. Geological Survey, completed in late 2007, was the first survey done for the Permian Basin since 1995. The previous survey didn’t make any assessment of unconventional natural gas from shale or tight sands, according to Schenk. He said the most recent survey, however, listed more than 35 Tcf for the Woodford and Barnett Shale formations in the Delaware Basin in Far West Texas.
“That is a big jump,” Schenk acknowledged.
According to the USGS Web site, the assessment of undiscovered oil and gas potential in the Permian Basin was geology based and used the total petroleum system (TPS) concept.
“The geologic elements of a total petroleum system,” according to the Web site, “are petroleum source rocks (quality, source rock maturation, generation and migration), reservoir rocks (sequence stratigraphy and petrophysical properties), and traps (trap formation and timing). This study assessed potential for technically recoverable resources in new field discoveries only.”
Using this geologic framework, the USGS defined a “Paleozoic Composite Total Petroleum System and 31 assessment units within the system, and it quantitatively estimated the undiscovered oil and gas resources with 30 of the assessment units.”
According to the USGS explanation of its methodology, “each of the 26 conventional oil and gas assessment units in this study is geologically comparable to one or more oil and gas plays that were defined in the Permian Basin Province by the Bureau of Economic Geology, Texas, and the New Mexico Bureau of Geology and Mineral Resources.”
For the first time, the USGS defined continuous (unconventional) assessment units (AU) in the Permian Basin. Those units were the Spraberry Continuous Oil AU, the Woodford-Barnett Continuous Gas AU, the Delaware-Pecos Basins Woodford Continuous Shale Gas AU, the Delaware-Pecos Basins Barnett Continuous Gas Shale AU, and the Delaware Basin Wolfcamp Shale AU.
To break down the study even further, the USGS estimates for conventional resources were means of 747 million barrels of oil, 5.2 trillion cubic feet of gas, and 236 million barrels of natural gas liquids in 26 assessment units.
For continuous, or unconventional, resources, the USGS estimated a total mean resource of 34.8 Tcf gas in three assessment units, which comprise a mean of 2.8 Tcf gas in the Woodford-Barnett Continuous Gas AU of the Midland Basin, a mean of 15 Tcf gas in the Delaware-Pecos Basins Woodford Continuous Shale Gas AU, and a mean of 17 Tcf gas in the Delaware-Pecos Basins Barnett Continuous Gas Shale AU in the Delaware Basin. The Delaware Basin Wolfcamp Shale AU was not assessed.
For continuous, or unconventional, oil resources, the estimated mean was 510 million barrels of oil in the Spraberry Continuous Oil AU in the Midland Basin.
“The assessment indicates that the majority of undiscovered natural gas in the Permian Basin Province,” according to the USGS report, “is estimated to be in three continuous assessment units of the Delaware and Midland Basin. Of the total mean of 41 Tcf gas in the province, about 35 Tcf is estimated to be in these three assessment units. Given that few wells have produced from these assessment units, there is significant geologic uncertainty in these estimates.”
Schenk, however, pointed out that perhaps the most interesting fact about the impressive potential in the USGS report for the Permian Basin may be what the survey doesn’t include.
“We assess for new field discoveries, only,” he said. “Field growth (or reserve growth) of conventional oil and gas fields was not included in this survey.”
Schenk admitted that the Permian Basin, home to nearly 70 percent of the nation’s carbon-dioxide (CO2) floods for enhanced oil recovery, is probably the leading basin in the world in field growth, thanks to new technology such as horizontal drilling and improved fracturing techniques and field growth produced by secondary and tertiary recovery efforts.
“Because our report doesn’t report reserve growth, these numbers may look too low to some people,” Schenk added. “Reserve growth is key to the Permian Basin.”
Future oil potential is declining worldwide, acknowledged Schenk.
“Oil in the future (from the United States) is going to come from California, Alaska, the Permian Basin and the Bakken (a new shale oil discovery in North Dakota),” he said. “Otherwise, oil is declining.”
Natural gas potential in the United States, however, is “hanging in there,” Schenk claimed. In many cases, undiscovered natural gas potential is increasing remarkably, thanks to the nation’s burgeoning shale gas and tight sands plays ranging from the Barnett in North Texas, the Woodford in Oklahoma, the Fayetteville in Arkansas, the Haynesville in Northwest Louisiana, the Marcellus in Pennsylvania and the Appalachian region in the Northeast, the Eagle Ford in South Texas, and the numerous fields in the Rocky Mountains.
Only time will tell whether the Woodford and Barnett in the Permian Basin will join that growing list of shale gas plays around the country that have so greatly increased America’s supply of natural gas. But according to the USGS, the potential is there.
The reserve growth potential, combined with the USGS estimates for new field discoveries, paints a bright picture of the future of the oil and gas industry in the Permian Basin, a region that has been the nation’s petroleum industry leader for more than 80 years and shows no signs of slowing down.

H – By Al Pickett, Special Correspondent
http://www.pbog.com/index.php?page=article&article=151