The Permian Basin is on its way to becoming the most productive oil play in the United States. In the next few years, the Wolfcamp Shale in this basin could by itself overtake the Bakken Shale in North Dakota and Montana in the amount of money spent for exploration and production in tight oil plays.
Currently, the exploration of the Wolfcamp Shale is occurring in the following Texas counties: Glasscock, Sterling, Reagan, Irion and Crockett. As the area is explored further, adjacent counties may be involved.
Wood Mackenzie, a research and consulting organization, did an analysis on Wolfcamp recently and came to the conclusion this could happen as early as 2017. At present, Wolfcamp comes in third in expenditures after the Bakken and Eagle Ford Shales. This year’s expenditure in the Wolfcamp is more than $12 billion, mainly due to an increase in drilling rigs in the first and second quarter of 2014, which is 80% of what was spent this year in the Bakken Shale. Wood Mackenzie increased its projections for Wolfcamp capital expenditures in 2015 by more than $4.3 billion to $13.9 billion. Crude and condensate production is about 200,000 barrels per day now but is expected to reach 700, 000 barrels per day by 2020.
The Wood Mackenzie analysis pointed out that the Wolfcamp is still in the early stages of development with only 10% of the projected capital outlay spent so far. Expectations are that the Midland Wolfcamp will outpace the Delaware Wolfcamp due to higher oil cuts, lower well costs and better infrastructure. Wood Mackenzie expects the Midland to drive oil production for the next twenty years in this area. This year, new entrants into the Permian basin have hoped to cash in on the stacked pay potential in Wolfcamp.
Benjamin Shattuck, an upstream analyst for Wood Mackenzie, said that “(t)here is reason to be cautiously optimistic. While we have seen performance improve across all benches of the Wolfcamp, we are still waiting for an operator to effectively develop multiple benches over a sizeable acreage position.”
Mr. Shattuck said “(i)t’s not based on location. It boiled down to attention to the Permian: How long have these operators been operating in the Permian and, if they hadn’t been operating in the Permian for long, how focused are they?” He also noted that “(a)s operators have been out there for the past couple of years, they’ve been exploring up and down the stratigraphic column. The results in these benches continue to improve.”
Companies are responding to the new opportunities. Energen Corporation has tested five new Wolfcamp exploratory wells in the Permian Basin and drilled 19 new wells through June 30, 2014 as part of its Wolfcamp development program in southern Glasscock County.
If you own mineral interests in one of the Wolfcamp Shale counties, you may be contacted by a landman representing an oil company who want to lease your minerals. Be smart and have an oil and gas attorney review the lease before you sign it so you can get a good lease for your minerals.
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