2. Outline
Introduction
Background
Greater Permian Basin Geological Framework
Wolfcamp Formation, Greater Permian Basin
Petrophysical Properties of Wolfcamp Formation of Midland Basin
Oil Exploration and Production History
Completion Technology and Practice
Environmental Impact
Production Analysis
Conclusion

3. Introduction

4. Introduction

5. Background

6. Background
Horizontal Drilling + Modern Hydraulic Fracturing Barnett Shale Gas Play success Shale Revolution

7. Background (EIA 2015b) Region Country Wet Shale Gas1
(trillion cubic feet)
Tight Oil1
(billion barrels)
Date updated
North America
U.S.
622.5
78.2
4/14/2015
Eastern Europe
Russia
284.5
74.6
5/17/2013
Asia
China
1115.2
32.2
South America
Argentina
801.5 27
North Africa
Libya
121.6
26.1
Total from 46 countries assessed
7,576.60
418.9

8. Background
(EIA 2016)

9. Background Region Basin Crude Oil (Bb) Jan-2013 Jan-2016 East
Appalachian
1.6
3.3
Gulf Coast
TX-LA-MS Salt
0.8
Western Gulf
21.9
24.5
Midcontinent
Anadarko
1.0
Rocky Mountain/Dakotas
Denver
0.5
6.4
Greater Green River
0.9
Montana Thrust Belt
0.6
Paradox
Powder River
2.1
Southwestern Wyoming
2.2
2.6
Uinta-Piceance
0.7
Williston
22.7
16.1
Wind River
0.1
0.3
Southwest
Fort Worth
0.2
Permian
21.2
42.9
West Coast
San Joaquin/Los Angeles
Total
78.2
103.8

10. Background (Shenck et al. 2008) Play Crude Oil (Bb) AEO2011 AEO2012
Play
Crude Oil (Bb)
AEO2011
(01/01/09)
AEO2012
(01/01/10)
AEO2013
(01/01/11)
AEO2014
(01/01/12)
AEO2015
(01/01/13)
AEO2016
(01/01/14)
AEO2017
(01/01/15)
AEO2018
(01/01/16)
Abo
1.0
0.7
0.6
Avalon/Bone Spring
1.6
2.0
2.9
2.1
4.0
Barnett-Woodford
0.0
0.1
Canyon
0.9
0.2
Spraberry
0.5
1.3
8.1
10.6
14.2
4.2
Wolfcamp
1.9
3.4
6.1
6.9
11.1
33.8

11. Geological Framework

12. GPB Geological Framework
(Modified from Dolton et al. 1979)

13. GPB Geological Framework
(Dolton et al. 1979)
Tobosa Basin (Cambrian – Early Carboniferous)
Tectonic activities – Ouachita orogeny (Late Carboniferous – Early Permian)
Deep marine water deposition and shallow back-reef lagoonal deposition (Permian)

14. Wolfcamp Formation

15. Wolfcamp Formation
(EIA 2018b)
(Baumgardner et al. 2014)

16. Wolfcamp Formation – Hydrocarbon resource assessment
1979 (Dolton et al.)
first resource assessment for GPB
based on depth interval
1995 (Ball)
thin to absent in Midland Basin
carbonate facies – reservoir rocks
shales – source rocks
2007 (Shenck et al.)
first unconventionals included in GPB resource assessment
Midland Basin: Woodford-Barnett (gas) and Spraberry (oil)
Wolfcamp in Delaware Basin not quantitatively assessed
2016 (Gaswirth et al.)
unconventional play assessment Wolfcamp, Midland Basin
2018 (Gaswirth et al.)
unconventional play assessment Wolfcamp, Delaware Basin

17. Wolfcamp Formation – Continuous Oil AU’s (P50)
Total Petroleum System
Oil (MMBO)
Gas (BCFG)
NGL (MMBNGL)
Midland
Delaware
Wolfcamp A
5,815
13,229
4,652
26,492
465
2,648
Wolfcamp B Upper
5,829
9,154
4,663
36,601
466
3,661
Wolfcamp B Lower
1,430
5,458
1,144
21,815
114
2,181
Wolfcamp C
1,433
1,635
1,146
24,486
115
1,961
Wolfcamp D
4,920 -
3,936
394
Midland Basin Northern Wolfcamp
521
417 42
Total
19,948
29,476
15,958
109,394
1,596
10,451

18. Petrophysical Properties

19. Petrophysical Properties – Midland Basin
Midland Basin – overview:
intracratonic deep water basin surrounded by shallow water carbonate platforms
boundaries: north – Northern Shelf, east – Eastern Shelf, south – Ozona Arch and Val Verde Basin, west and southwest – Central Basin Platform
Horseshoe Atoll – conventional oil play
Midland Basin – deposition:
basinal facies (central): horizontally bedded successions
carbonate platform facies (edges): stratigraphic discontinuity, carbonate rocks, clinoform profile

20. Petrophysical Properties - Leonardian and Wolfcampian
Rock group distribution:
(Hamlin and Baumgardner 2012)

21. Petrophysical Properties - Leonardian and Wolfcampian
Rock group distribution (cont.):
(Hamlin and Baumgardner 2012)

22. Petrophysical Properties - Leonardian and Wolfcampian
Basinal lithofacies:
sandstone, conglomeratic sandstone, laminated siltstone, mudrock, calcareous mudrock, conglomeratic carbonate, and carbonate packstone/grainstone
mudrock and calcareous mudrock: dominant in Wolfcamp Formation, rich in organic content
(Baumgardner et al. 2014)

23. Petrophysical Properties – Wolfcamp Formation
TOC is highest in siliceous mudrocks and lowest in carbonate facies
Kerogen
Type II (Hamlin and Baumgardner 2012)
Type II/III and Type III (Baumgardner and Hamlin )
Brittleness increases with increasing calcite content and decreases with silicon content
Present day in-situ stress trending east-west
Permeability ranging from 10nD to 3mD
API gravity degrees for Wolfcamp Shale and degrees for Cline Shale
(Menchaca 2012)
Wolfcamp Shale
Cline Shale
TOC (%)
2 to 10
2 to 8
Porosity (%)
4 to 8
5 to 12
Pressure gradient (psi/ft)
0.45 to 0.5
0.55 to 0.65
Vitrinite reflectance (%)
0.7 to 0.9
0.85 to 1.1

24. Oil Exploration and Production

25. Oil Exploration and Production History
1923: Santa Rita No. 1 – first producing oil well (67 years)
1929: first recorded true horizontal well
1973: peak of conventional oil play
2009: modern hydraulic fracturing implemented at scale
2011: modern hydraulic fracturing + horizontal drilling
(Hughes 2018)
(GPB production, Hughes 2018)

26. Oil Exploration and Production History
May 2017:
Spraberry Play 38% of total production
Wolfcamp Play 28% of total production
Bone Spring Play 10% of total production
(Wolfcamp Play Production, Hughes 2018)

27. Oil Exploration and Production History – Wolfcamp Play
(Blomquist 2016)

28. Completion Technology and Practice

29. Completion Technology and Practice
Three-string casing design
production casing: 5.5” cemented in 8,75” wellbore
Low-weight high viscosity mud – salt section
Lateral:
5,000ft – 10,000ft (mean around 7,500ft)
>60% hybrid
>60% more than 10 traps
Plug and perf completion
Zipper fracturing method – pad drilling operation

30. Completion Technology and Practice - Issues
H2S water flow – San Andres Formation
disposal water
H2S water at low-weight mud, heavy lost circulation at higher weight mud
four-string casing design – high operational cost
Innovation: modified three-string casing design with LVSM
Stress shadowing and fracture bias
Innovation: using microseismic imaging to assess fracture trend
(Chen et al. 2018)
(Patel et al. 2016)

31. Completion Technology and Practice – Best Practices
Shorter fracture stage spacing
Straight-line measurement between laterals: ft
Use of hybrid fracture fluid (slickwater and gel)
Increase in proppant amount, fluid amount, and pump rate – complex fracturing
*Relatively young play,
optimal values need further studies*

32. Environmental Impact

33. Fresh water demand for hydraulic fracturing
Environmental Impact
Fresh water demand for hydraulic fracturing
around 1 million gallons per well (2014)
around 2% recycled, the rest reinjected – H2S water flow issues
competition for water allocation down the line
innovation: water processing plants to process formation brackish water and operational wastewater
Sand mining – Dune Sagebrush Lizard habitat
local sand up to 50% cheaper than Midwest sand
mining disturbed more than 1,000 acres of habitat in 2017
petition submitted to add DSL to endangered species list
mitigation: State of Texas rewriting the conservation agreement first implemented in 2012 to better protect the habitat
Increase in traffic and stress on local infrastructure
13% increase in roadside deaths from 2012 to 2013
63% increase in crashes from 2016 to 2017
GPB accounted for 10% of highway fatalities in 2018
mitigation: in 2018, US energy companies pledged $100 million for local infrastructure

34. Environmental Impact Natural gas flaring
Texas laws ban flaring except for specific short-term purposes
Texas Railroad Commission may issue long-term permit while waiting on gas transport infrastructure
4.4% of produced gas was flared in 2017
solution: investment in midstream infrastructure to increase natural gas processing and transportation capacities

35. Production Analysis

36. Most common method to estimate reserve: decline curve
Production Analysis
Most common method to estimate reserve: decline curve
Horizontal play only dates as far back as 2011
Vertical play decline rate 5-10% applied
Wood Mackenzie (2018) found decline rate is likely 12-14%
Overestimation of well values
DCA equation
Arps equation, not suitable for shale – low porosity, long transition flow
Modifications: Power Law Exponential, Duong, Stretched Exponential, Continuous EUR, Logistic Growth Model
DCA on production data using DrillingInfo
Actively producing horizontal wells targeting Wolfcamp in Midland Basin (Jan 2011-Oct 2018): 1,647 wells
Wells with at least 5 years continuous production (Jan 2011-Nov ): 556 wells
Peak production on average at the second month
Analysis done using default setting on six model types

37. Production Analysis
Model Type
EUR1 (P50)
EUR1 (Best Fit)
Arps equation
95,076
94,770
Stretched Exponential
84,826
84,698
Duong1 -
Power Law Exponential
88,515
88,082
Logistic Growth
103,688
100,104
Best Fit (auto-fit)
99,869
100,116
At $50/bbl oil price, the difference between the lowest and highest estimates is nearly US$1MM
Empirical production analysis is low-cost, but subject to subjective interpretation
Computer-aided theoretical production analysis is not yet attractive to operators at the moment but may yield more accurate estimates

38. Conclusion

39. Conclusion
Central basin area ideal for tight oil play
Significant increase in production and resource assessment since the application of horizontal drilling and modern hydraulic fracturing
Continuous innovation and improvements on drilling and completions
Increase in oil and gas activity impacted the surrounding environment, steps are taken to mitigate
Production analysis for forecasting and reserve estimation purposes using DCA is prone to overestimation due to not enough historical production data from horizontal wells

40. Acknowledgment