1. Remaining Oil & Natural Gas Resources of New Mexico Ron Broadhead New Mexico Bureau of Geology & Mineral Resources A division of New Mexico Tech

2. Key Questions How much extractable oil and gas is left in New Mexico? How long will production last?

3. Resource Categories Resource category DefinitionConfidence level Proved reservesAlready discovered mostly drilled High Undiscovered resources – productive trends Undiscovered but along known trends -undrilled Medium Undiscovered resources- new trends in productive basins, new basins Undiscovered trends in well known productive basins New basins (poorly known) Undrilled Low

4. Natural Gas Production history Reserves Resources How long?

7. Natural Gas Resources Resource type Gas (TCF)Source Proved reserves17.3EIA/DOE Undiscovered resources 51.2USGS Undiscovered resources 72.1PGC Total resource base 68.5-89.4

8. How long will this last at present rates of production (1.6 TCF/year)? Proved reserves10.8 years Undiscovered resources32-45 years (providing estimated gas is explored for, discovered & brought online)

9. Production History, U.S. Gas From Potential Gas Committee (2000)

10. Reserve Life Index _Proved reserves_ Annual production

12. Crude Oil Production history Reserves Resources How long?

14. Oil Resources Resource type Oil (MMBO)Source Proved reserves705EIA/DOE Undiscovered resources 776USGS Total resource base 1481

15. How long will this last at present rates of production (67 MMBO/year)? Proved reserves10.5 years Undiscovered resources11.5 years (providing estimated oil is explored for, discovered & brought online)

16. Production History, U.S. Oil

18. First Conclusions The Reserve Life Indices for oil & gas have remained surprisingly stable over the last 20 to 30 years Oil and gas resources have been moved from the undiscovered category to the discovered category at a rate approximately equal to production Undiscovered resources have been underestimated

19. So how have oil & gas been added to the resource base to keep the Reserve Life Indices from falling through the floor? Some notable examples…

20. Recovery enhancement Waterflooding/pressure maintenance -Vacuum Grayburg San Andres reservoir From current work on DOE/PUMP project –Digital analysis & portfolio of oil reservoirs in Permian Basin

21. Redevelopment of old fields e.g. Dagger Draw

22. Effect of Dagger Draw on NM Production

23. Additional resources through new plays Brushy Canyon discoveries From current work on DOE/PUMP project – Digital analysis & portfolio of oil reservoirs in Permian Basin

25. Additional resources through new unconventional gas

26. Other Emerging Possibilities Horizontal drilling in old fields (San Andres, Yeso Fms., SE NM) Unconventional gas sources (incl. shale gas, low K carbonates) New basin production (Raton coalbed methane, other areas)

27. Second Conclusions What will it take to keep the decline in check? Renewal of old fields through redevelopment, EOR, etc. Discovery of new plays New sources of unconventional gas All of the above have their role

28. And above all… Drill