Thursday, July 20, 2017

The Energy And Market Page, Part III, T+181 -- July 20, 2017

Long, long article on OXY in Forbes and OXY's experience in the Permian. The reader who sent me the link noted that OXY was producing oil for $28/bbl in the Permian. My quick, unedited, not-ready-for-primetime reply:
The self-reported prices per bbl by operator are always highly suspect; depends what they include in costs.

If OXY says they are getting Permian for $28/bbl, the "new" bbls coming out of the Bakken are much less -- using same method OXY uses to cost-out oil production.

The only thing the Bakken loses to the Permian is on transportation costs.

By the way, the thickness of a play is relevant in conventional plays; totally irrelevant in unconventional plays. (The linked article makes a point about how thick the Permian is.)

The Bakken is 94% oil. The Permian is significantly less, maybe 75% -- it varies across the basin.
We all remember how badly OXY's experience in the Bakken was; hopefully OXY does better in the Permian.  Maybe with a thicker play the company will be able to keep the wellbore in the target zone.

4 comments:

  1. ExxonMobil said it's going to up investment in both the Permian and the Bakken:

    --- Exxon and other big oil players have a plan to make a lot of money off cheap oil in the United States ---
    http://www.cnbc.com/2017/03/03/oil-majors-move-deeper-into-shale-country-bumping-up-us-production.html

    "When Exxon Mobil's new CEO spoke to Wall Street this week, high on his list of growth opportunities were the nontraditional oil fields in the United States, where the diversified energy giant can make a profit even when crude prices are just $40 per barrel.

    A big chunk of Exxon's upstream spending will go to shale this year. "More than one third of the capex [capital and exploration spending] will be invested in advancing our large inventory of … short-cycle opportunities. They are primarily Permian and Bakken unconventional plays and short-cycle conventional work programs."

    https://s11.postimg.org/6f8q1qgz7/Captura_de_pantalla_1115.png

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    1. I haven't followed XOM in years except XTO in the Bakken. My impression of XOM is this: a) it seems to be not much more than a regulated utility; b) its Permian is in an undeveloped area; and, c) XTO in the Bakken is one of its E & P jewels.

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  2. I want to correct something I said the other day. I said that Saudi Arabia was the leader in developing horizontal drilling technology.

    However, since then I found this paper from 2003:

    --- Horizontal Drilling—A Global Perspective ---
    http://store-assets.aapg.org/documents/previews/525Mth14/CHAPTER01.PDF

    "Although the concept of horizontal drilling emerged in the 1920s, economic viability was not demonstrated until the 1980s, when pilot projects at Rospo Mare field in Italy (1982) and Prudhoe Bay field (1984) and in the Austin Chalk of Texas (1985–1987) achieved three- to fourfold productivity increases with less than twofold cost increases.

    From a base of 51 wells in 1987, horizontal drilling increased rapidly; it expanded to the world’s active producing provinces and peaked during 1997 with 4990 wells.

    Horizontal drilling, which increases wellbore exposure to the reservoir, has delivered multiple benefits. Operators have used horizontal wells to revive economic production, to increase and speed recoveries, to reduce costs, and to increase rate of return. These benefits are critical for operators that must cope with increasing competition and volatile oil prices.

    The objective of this paper is to characterize the global geographic and geologic distribution of horizontal wells and to illustrate some of the benefits of horizontal drilling with examples from key fields and trends.

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    Replies
    1. Thank you. And unless I'm missing something, these papers have to do with directional and horizontal drilling; and, does not include fracking.

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