New research shows Permian Basin with 60 to 70 billion barrels remaining

Over 70 Permian Basin plays production corrected

Energy researchers at IHS Markit have completed the first, three-year phase of a massive Permian Basin research project that models and interprets the giant basin’s key geologic characteristics.

It was done to better estimate Permian’s remaining hydrocarbon potential, and initial results indicate the giant basin still holds an estimated 60 billion to 70 billion barrels of technically recoverable resources, according to IHS Markit.

To conduct this new analysis, researchers used historical well and production database that includes more than 440,000 Permian Basin wells, and a new proprietary software tool that, for the first time, enables them to leverage interpreted formation ‘tops’ data to identify accurate formations for completion intervals on hundreds of thousands of wells.

“When a geologist looks for new oil reserves, we typically go back to geologic targets where we know oil was targeted and produced previously, and in a well file, we call those targets the producing or completion formations,” said John Roberts, executive director, global subsurface content operations at IHS Markit.

These results significantly alter the understanding of the Permian Basin’s resource potential.

“This producing formation data is a critical element in assessing and correlating future drilling and production activity, but since that information is highly competitive, many operators have historically under-reported that information, which has created much ambiguity in the data,” said Roberts.

The IHS Markit team spent thousands of hours and more than three years building the technology and using it to ‘rigorously and methodically’ update the company’s hundreds of thousands of historical well and production records that cover the Permian Basin’s nearly 100-year history.

“Using a new technology we developed, we’ve leveraged our proprietary IHS Markit interpreted formation-tops data to identify accurate formations for completion intervals on hundreds of thousands of wells, and the results change the game for this basin and for geologists’ interpretations,” Roberts said.

The Permian Basin, which is a mature hydrocarbon basin located primarily in west Texas and extending into southeastern New Mexico, has produced more than 39 billion barrels (cumulative) of oil since it first began production in the 1920s, reaching a previous production peak in 1973.

As conventional oil production in the play declined steadily during the following three decades, many in the industry thought the Permian’s best days were behind it, but unconventional drilling and completion technology changed the game in the 2000s.

This advance made possible the extraction of unconventional shale resources that were previously uneconomic to produce, and changed the view of geologists, who, for decades, had bypassed these less desirable targets in favor of conventional reservoirs.

With the onset of horizontal drilling and new completion technology during the past decade, the production decline in the Permian has been reversed and the basin is on track to soon eclipse its previous peak, according to IHS Markit.

“The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices,”  said Chungkham, a co-author of the research.

IHS Markit says that in this analysis, they modeled and interpreted more than 70 formations and benches across the Permian Basin and have delivered them in a work-station-ready 3D format, so Permian operators or new-entrants can fast-forward their analysis.

“In particular, the tremendous improvement in assigned-producing formations adds significant detail and dramatically changes the views of the basin and our understanding of where future hydrocarbon potential exists, allowing for faster economic evaluation of acreage and productive potential,” said Chungkam.

IHS says in their analysis, a previously undiscussed opportunity for production may be from the tight, non-continuous plays produced through short-lateral wells and low-volume fracking. This offers lower risk, improved upside potential and ultimately, lower recovery costs, which is good news for operators.

Co-author Roberts noted that given concerns about a potential crude supply shortage in the medium term, understanding economic limits of both geography and geology in the Permian is key for operators and investors.

“It enables operators to fast-track their existing interpretation efforts in the play or to enter new parts of the play. To our knowledge, this is the most ambitious, comprehensive Permian Basin geologic interpretation analysis and modeling project of its kind to date, but we’re not done yet. We are already at work on the second phase of the Permian Basin analysis, which is to further delineate the various Wolfcamp sub-benches,” concluded Roberts.