Peter Huddleston, President of Huddleston & Co. and a prominent petroleum engineer and a friend, agreed to report on the status of shale plays in Texas at our firm’s land and mineral owner seminar on November 9. He kindly agreed to let me use some of his slides. You can click on all images below to enlarge.
Peter’s presentation concentrated on developments in the Eagle Ford and the Permian Basin, by far the sources of most drilling in Texas today.
The map below shows the extent of the Eagle Ford formation.
Below graph shows cumulative Eagle Ford production to date, and number of wells producing.
I recently ran across an article on Investing.com, “The Problematic Truth About U.S. Shale Oil Production,” by Dr. Ellen Wald, who hosts a podcast about global energy. Dr. Wald reports on her recent podcast discussion with Art Berman, a geology consultant and frequent speaker and author. It reminded me that I wrote about Mr. Berman several years ago, when the shale gas plays in the Marcellus and Barnett were getting started. He told Dr. Wald that the Permian shale plays have much smaller reserves than others — including the Energy Information Administration — have estimated, as little as 3.8 billion barrels.
In 2010, I wrote about Mr. Berman’s attendance at a conference in Washington sponsored by the Association for the Study of Peak Oil & Gas – USA, of which he is a director. At that time he argued that the gas reserves in the Marcellus were much smaller than were being predicted. A year earlier, Mr. Berman created a stir when he published a gloomy analysis of the Barnett Shale. He was then a contributor to World Oil, a trade publication, and World Oil refused to publish one of his articles, causing him and his editor to resign and creating a stir.
Mr. Berman was on a panel hosted by Texas Monthly in 2013, along with Scott Tinker of the UT Bureau of Economic Geology, and Kenneth Medlock, then an energy fellow at the Baker Institute. He continued to question estimates of shale oil and gas reserves. (Dr. Tinker created a wonderful website for those wanting to know more about world energy, the Switch Energy Project, worth exploring.)
My clients regularly complain of flares from wells on their property. Most leases don’t require royalty payments on flared gas, so their royalty is going up in smoke. Flares often don’t function properly, resulting in emissions of toxic gases. Flares make noise.
The Environmental Defense Fund recently released an excellent report on flaring in the Permian Basin, Permian-Flaring-Report-2017. EDF analyzed flaring and venting by 15 major producers in the Permian for the years 2014-2015. Here’s what they found (click on image to enlarge):
This article appeared yesterday in the New York Times: Land Rush in Permian Basin, Where Oil Is Stacked Like a Layer Cake. Exxon announced a $6.6 billion deal to buy the Bass family’s position in the Permian. Noble Energy agreed to buy Clayton Williams Energy for $2.7 billion, acquiring Williams’ 120,000 acres in the Permian. Anadarko announced it is selling its Eagle Ford shale leases to Sanchez Energy and Blackstone Group for $2.3 billion so it can concentrate on developing its leases in the Permian. SM Energy and EOG Resources are also selling assets in other fields to acquire larger interests in the Permian. According to the Times, there have been more than $25 billion of mergers and acquisitions in the Permian since June last year. The frenzy to acquire assets has become known as “Permania.” Companies claim they can make money at as little as $40/bbl. The reason: multiple “stacked” zones in the Permian, principally the Spraberry and Wolfcamp formations, allow multiple wells at different depths on each property.
The news this week is full of stories about the EIA’s new figures on the amount of recoverable oil in the Permian Basin. Unlike the rest of the country, the rig count in the Permian is rising and is now equal to all other rigs in the country combined. Permian oil production exceeds that from the Eagle Ford and the Bakken. And unlike all other plays, production from the Permian continues to grow. From EIA’s Drilling Productivity Report (click to enlarge):