Horizontal Drilling Boosts Permian Basin’s Fortunes
Horizontal drilling was rarely used in the Permian Basin through the 1980s but advancements in the technology have sent the region’s oil and gas fortunes soaring.
“All of us who have been here a long time have seen a lot of things come and go,” said Mike Party, president and owner of Beryl Oil and Gas, discussing the evolution of horizontal drilling with members of the Midland chapter, Society of Independent Professional Earth Scientists.
In 1985 there were U-Haul trailers lined up to take Midlanders away from the city, he said. Today, those U-Hauls are lined up to bring people into Midland, he said.
"Today, everyone wants to be here. The Permian Basin is the hottest thing going,” he said.
And the advent of horizontal drilling technology, combined with similar advances in hydraulic fracturing, have improved Permian Basin output, Party said.
Initially, Permian Basin operators were focused on field development through production and water injection, with many drilling small zones or tying multiple zones together to boost production, he said.
The first horizontal well was drilled in the Dean formation in 1987, followed by the first horizontal San Andres well in the Yates field. Parker and Parsley, predecessor of Pioneer Natural Resources, drilled the first horizontal Spraberry well in Midland County in 1988. The first horizontal Wolfcamp wasn’t drilled until that same year.
It wasn’t until 2011 that horizontal drilling in the Bone Spring and Wolfcamp began to take off, as companies began to shift from drilling Wolfberry wells, Party said.
While it was the horizontal Third Bone Spring wells that began the trend, Party said horizonal Wolfcamp drilling “really shined a light. It was a natural progression from the Bone Spring to the Wolfcamp, and it spread like crazy.”
Technology has helped, with crews able to drill horizontal Wolfcamp wells in about 12 to 15 days compared to 25 days previously, he said.
“What’s defined as limits has expanded, the paradigms are changing,” Party said. “Technology has made marginal wells more economic, even in a low price environment. We’re also in our third or fourth iteration of fracking parameters. Operators are taking wells that were marginal, changing the frac programs and making them economic.”
Operators also are cooperating to help consolidate acreage positions through land swaps or joint ventures to allow for the longer and longer laterals increasingly being used in horizontal drilling.
Party estimated that in the top 20 producing formations, 98 percent of the wells are horizontal, and in the top five formations, 88 percent of all wells are horizonal wells. He said producers will drill between 4,000 and 5,000 horizontal wells this year. There are 27 operators who have drilled more than 250 horizontal wells and account for more than 60 percent of the region’s horizontal wells, Party said. Concho Resources and Diamondback Energy top that list of operators.
Strong drilling activity has given rise to a number of drilled, uncompleted wells, or DUCs. Party said there are about 2,000 DUCs today, compared to about 1,000 a year ago.
“The takeaway could be the fact everyone’s trying to hold by production acreage,” he said.
Operators can drill Wolfcamp wells to hold the deeper formations by production, allowing them to continue working shallower formations like the Bone Spring and the Spraberry.
He said a shortage of frac crews has resulted in adding to that well inventory. With so many wells to be completed and put on production, he said the Permian Basin won’t be slowing down anytime soon.
While horizontal Wolfcamp drilling has sent Permian Basin production rising, along with horizontal drilling in the Bone Sping, the Spraberry and, increasingly the San Andres, Party said operators are looking at new formations, such as the Clearfork.
“There were times when everyone wondered why we were in the Permian Basin,” Party said. “The last 10 years have told us why.”