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GEOGRAPHIC FOOTPRINT

Murchison Oil & Gas has been a successful Permian and San Juan basin operator for over 30 years.

Permian Basin

The Permian Basin of West Texas and Southeast New Mexico is the largest onshore oil producing region in the United States. It is a mature basin with legacy oil fields, multiple pay zones, proven reserves, relatively low cost drilling and access to transportation and markets.

 

The Permian Basin is one of the most prolific and longest-producing oil basins in the United States. It accounts for approximately 18% of U.S. crude oil production and 23% of the nation’s oil reserves. Since it first started producing in 1921, Permian Basin oil production peaked at 2,085 Mbopd in 1973, and gradually fell to 850 Mbopd by 2007 before trending up again in the last few years to reach 892 Mbopd in 2010.

 

The Permian Basin spans an area of approximately 260 miles wide and 300 miles long. It is divided into Eastern and Western halves by the North-South trending Central Basin Platform. Major subdivisions and boundaries are identified as the Delaware Basin, Northwestern Shelf, Central Basin Platform, Midland Basin, and Eastern Shelf. The two sub-basins are asymmetrical in cross-section harboring thicker Permian sediments and more structurally deformed lower Paleozoic sediments near the edges of the Central Basin Platform.

 

Permian Basin Structural Setting

The Permian Basin had been a passive sedimentary basin covered by the Permian Sea until uplifts and subsidence during late Mississippian and early Pennsylvanian periods created the current configuration of the basins, shelves, and platforms. The complicated structural and stratigraphic history allowed for the formation of traps for world class oil and gas deposits. The basin is filled with Paleozoic era sediments that reach a maximum thickness of over 29,000 feet with relatively thick sequences of Pennsylvanian and Permian strata containing both organically-rich source rocks and reservoir rocks. About 80% of significant sized oil reservoirs in the Permian Basin produce from depths less than 10,000 feet.

 

Traditionally, the Permian Basin was referred to as “hard rock country” since carbonates have been the dominant type of reservoir rock accounting for approximately 75% of cumulative oil production to date. Successful application of unconventional technologies such as horizontal drilling, directional drilling, and multistage fracture completions helped industry to exploit hydrocarbons in lower permeability rocks such as shale and tight sands. Advances in geochemical analysis and seismic reservoir characterization techniques also allowed for large scale exploration of shale resources. These developments have led to further delineation of numerous shale and tight sand plays such as the Wolfcamp, Bone Spring and Avalon Shale, which transformed the Permian Basin into a new popular spot for North American shale development. Growing industry interest in emerging unconventional plays and other prolific oil-prone resources of the Permian Basin recently led to a record breaking increase in M&A activity and lease sales of Permian properties.

 

Selected Permian Basin Stratigraphy

In many areas of the Permian Basin, producing formations are vertically stacked on top of each other enabling oil companies to access multiple pay zones at different depths with a single well. The ability to commingle production from stacked pay zones significantly enhances well economics and makes it possible to produce reserves that would otherwise be classified as uneconomical. Much of the Permian Basin activity today focuses on the exploitation of stacked plays such as Wolfberry (Wolfcamp and Spraberry), Wolfbone (Wolfcamp and Bone Springs) and Wolffork (Wolfcamp and Clearfork).

 

Cross Section of the Northern Delaware Basin

The Permian Basin is considered one of the leading basins in the world for infill development, thanks to unconventional technologies and enhanced oil recovery efforts. Advances in horizontal drilling and multistage fracture completions allow operators to access more pay, accelerate recoveries, and to precisely drill into the most prolific parts of the reservoirs. Infill spacing opportunities and the ability to drill deeper into the ground also offer significant upside potential.

 

Original oil in place (OOIP) in the Permian Basin has been estimated to be 106 billion barrels of conventional oil reserves, of which less than 40 billion barrels have been produced to date. A substantial additional amount of residual conventional oil reserves still remain in the ground to be recovered. However, the greatest potential for the Permian Basin lies in the continuous discovery and development of unconventional plays, which can further contribute to future reserve growth.

 

Horizontal Drilling and Multistage Fracture Stimulations

One such emerging unconventional play is the Wolfcamp Shale. The Wolfcamp formation of early Permian age is widely present across the Permian Basin at depths ranging from 5,000 to 15,000 feet. The Wolfcamp is a mixed lithology system composed of sand, shale and carbonates. While carbonates dominate shelf to proximal basin deposits, basinal deposits are predominantly sand and shale. Compared to other onshore U.S. shale plays such as the Bakken, Eagle Ford and Marcellus, the Wolfcamp Shale is a thicker target with a gross interval of 600–700 feet, and a net interval of 200–400 feet. Based on recent drilling results, many industry experts agree the Wolfcamp Shale could turn into one of the largest oil discoveries in U.S. history.

 

The Bone Spring is another large unconventional play lying above the Wolfcamp formation in the Delaware Basin. The Bone Spring formation is a thick sequence of interbedded sandstones, carbonates and shale at depths ranging from 6,000 to 13,000 feet gradually getting deeper towards the south. Its members include the First, Second and Third Bone Spring Sands and corresponding carbonate intervals. The First and Second Bone Spring are widespread on the New Mexico side of the Delaware Basin, with Third Bone Spring objectives emerging near the Texas-New Mexico border.

 

The Avalon Shale is the uppermost member of the Bone Spring formation and found at depths ranging from 6,000 to 9,000 feet. Unlike the deeper Bone Spring formation, the Avalon is a true shale play with an organic-rich, thermally mature shale and siltstone interval and ample natural fractures. The Avalon Shale is usually associated with a higher gas-to-oil (GOR) ratio than the Bone Spring.

 

Selected Unconventional Plays of the Permian Basin

Shale development requires an advanced level of scientific knowledge and operational expertise. Understanding the intricacies of each play and developing technological solutions to address those is key for success. The Permian Basin still continues to offer exciting opportunities for major oil companies and independents, as well as local experienced operators with a long history in the basin.

 

References

Dutton, S. P., E. M. Kim, R. F. Broadhead, C. L. Breton, W. D. Raatz, S. C. Ruppel, and C. Kerans, 2004, “Play analysis and digital portfolio of major oil reservoirs in the Permian basin: Application and transfer of advanced geological and engineering technologies for incremental production opportunities”, University of Texas at Austin, Bureau of Economic Geology, final report prepared for the U.S. Department of Energy, 408 p.

 

Ball, M. M., 1995, “Permian Basin Province (044)”, U.S. Geological Survey

 

Tyler, N., and N.J. Banta, 1989, “Oil and gas resources remaining in the Permian Basin: Targets for additional hydrocarbon recovery”, University of Texas at Austin, Bureau of Economic Geology, Geological Circular 89-4, 20 p.