Emerging Permian Plays: Revival on the Rim

Abstract

Emerging Permian Plays: Revival on the Rim

Authors: Bryn Davies, Darrel Koo

The Permian Basin is on the forefront of many investors’ and operators’ minds across the US and internationally. M&A transactions of nearly $60 billion since 2016 highlight the undeniable attraction of the Delaware and Midland sub-basins, which experienced exponential growth in production and horizontal rig counts over the last two years. While vastly overshadowed by the unconventional plays of the Permian, a quiet revival in activity is occurring in the Central Basin Platform (CBP) and Northwest Shelf (NW Shelf). These areas demonstrate attractive economics due to discounted land prices and lower well costs for a low-risk proven resource. These regions account for approximately 85% of the ~30 Bbbl of total oil recovered to date in the Permian due to historical conventional drilling.

The Permian Wolfcamp Shale is the primary target of the Midland and Delaware basins. However, proximal equivalents of the rich basinal Wolfcamp shales create a very different reservoir, deposited on a broad, shallow carbonate shelf. Post-oil generation, significant tectonic activity occurred, causing uplift from the west and the resulting tilted oil-water contact allowed water to flow through the shallow (~5,000’ TVD) reservoir. This process increased the water saturation of the reservoir and created a thick transition zone, leaving behind residual oil zones (ROZ). This ROZ play concept is produced primarily from the San Andres Formation using horizontal wells with a lower fracture intensity (~500 lbs/ft compared to 2,000-3,000 lbs/ft) than in the unconventional Permian shales. Within the Yoakum County focus area, target thickness varies at 200-400 feet and porosity ranges from 6% to 16%. Compared to the Wolfcamp shales, the San Andres is approximately half the thickness and double the porosity. The play’s lithology is carbonate-dominated (limestone, dolomite and anhydrite) rather than shale-dominated. Historically targeted as a conventional carbonate reservoir, the San Andres is now being revisited with unconventional techniques and realizing comparable economics to the Wolfcamp shales.

Yoakum County’s San Andres horizontal ROZ play is a stark contrast to the better-known horizontal plays in the Permian Basin. Digital well logs were used to build a geological and petrophysical model of the Permian Basin and surrounding shelf, which was incorporated with drilling, completion and production data, M&A activity and well costs to compare all aspects of these plays. Ultimately, we have determined what is luring investors out of the core of the Delaware and Midland toward the CBP and NW Shelf.

AAPG Datapages/Search and Discovery Article #90350 © 2019 AAPG Annual Convention and Exhibition, San Antonio, Texas, May 19-22, 2019