Innovation and Discovery Thinking in the Permian Basin (Prototype Super Basin) and other Super Basins

Transcription

1 Innovation and Discovery Thinking in the Permian Basin (Prototype Super Basin) and other Super Basins Charles A. Sternbach AAPG President

2 Outline Permian Basin: Prototype Super Basin: Center for Innovation, favorable factors, and 5 innovation case studies Technology Transfer; Giant Fields through the decades, modern sharing of best practices, Professional Societies like AAPG and CSPG play a key role Social Choices: Energy mix, Economics, Environment, and Prosperity

3 Permian Basin 94 years Santa Rita #1

4 Permian Basin super basin prototype SW Modified from Murchison Oil and Gas, 2010, NE What is a Super-basin? More than 5 billion Boe cumulative production More than 5 billion Boe remaining production Multiple source rocks petroleum systems An assemblage of conventional, shale (continuous) and tight-non-continuous reservoirs Stacked pays Established infrastructure access to markets Established service sector & supply chains SW NE Source: IHSMarkit, Super Basins The basins that keep on giving, Sept Leta K. Smith, Pete Stark, Bob Fryklund

5 Permania! What does it mean? Assessed 45 formations with mass balance approach to estimate technically recoverable resources from the three reservoir categories. Estimated remaining recoverable > 80 billion bbls, more than twice the cumulative production to date. > Shale continuous reservoirs, dominated by Wolfcamp account for almost 70% of the total. > The combination of horizontal technologies & innovation have driven a 75% increase in capital efficiencies over the past 18 months. > Permian basin competitive at current oil prices and production ~ 2 MMb/d exceeds the 1976 peak. > Peak not driven by increase in oil price. Production ~ 2 MMb/d The Pratt Inflection Source: IHSMarkit, Super Basins The basins that keep on giving, Sept Leta K. Smith, Pete Stark, Bob Fryklund

6 Horizontal Drilling Key to the Pratt Inflection

7 Pick Up trucks also on the rise!

8 Fertile Ground

9 Global Super Basins Global Super Basins: Estimated Technically Recoverable ~ 860 Bboe Permian Source: IHS Energy 2016 IHS Location of 25 global Super Basins with cumulative production and remaining conventional technically recoverable oil and gas both >= 5 billion boe, multiple source rocks / petroleum systems plus established infrastructure, services and supply chains Source: IHSMarkit, Super Basins The basins that keep on giving, Sept Leta K. Smith, Pete Stark, Bob Fryklund

10 Future for Industry and AAPG With 25 onshore Superbasins, the World is watching the Permian Basin Skills and techniques have global application These basins may potentially add 860 Billion Bbls Oil Geoscience incremental value add role AAPG Strategy: Go where the Oil is (content, conferences, publications)

11 Why is the Permian an innovation Hot spot? Fundamentals: key source rocks, abundant plays, conventional, unconventional GEOLOGY MATTERS Infrastructure, service companies Rich petroleum History Ability to profit from results Economy of Scale Social License

12 Innovation 101 Five Key Skills: Associating Questioning Observing Networking Experimenting The Innovators DNA: Mastering the five skills of disruptive Innovators Jeff Dyer, et al, 2011 Henry Pettingill, chief geoscientist at Noble Energy, on left

13 Value Innovation Blue Ocean Strategy; Kim and Mauborgne 2015

14 Permian Basin Innovations: High-level Case Studies Case Studies: 1) 3-D seismic in exploration 2) Horizontal drilling 3) Completion technology 4) First tight oil resource play - Spraberry 5) Wolfberry to Horizontal Wolfcamp 3 Base map source: NETL 1 Midland From C.A. Sternbach and W. DeMis, 2017

15 First Use of 3-D in Exploration Trend Exploration Powell Ranch Wolfcamp Play 1 Before 3D: Drilled 14 wells 14% success 1 Mmbo After 3D: Drilled 42 wells 60% success* 10 mmbo Base map source: NETL Midland * Proved 3D was HUGE risk reducer in exploration From C.A. Sternbach and W. DeMis, 2017

16 Wolfcamp Facies & Paleogeography Map Legend 1 Powell Ranch Modified from Fu, 2011 From C.A. Sternbach and W. DeMis, 2017

17 Wolfcamp Isochron and Amplitude Maps Isochron C.I. = 2 ms Cross section Wolfcamp Isochron superimposed over amplitude data, section 4 Source: Montgomery, 1996 AAPG Bulletin Best production: Amplitude dims with isochron thicks From C.A. Sternbach and W. DeMis, 2017

18 3D Identified prolific channels AMACO POWELL #8 P&A 800 ft 1000 ft 450 ft TREND POWELL #8 1 MMBO TREND POWELL #9A 1 MMBO L AND B OIL CO. POWELL A #9 P&A Porosity in Channel Facies Source: Montgomery, 1996 AAPG Bulletin

19 Trend Exploration: Wolfcamp Production 3 D Seismic 3D Seismic Field Cum: MMBO 20 BCFG 1.8 MMBW From C.A. Sternbach and W. DeMis, 2017

20 Horizontal Drilling 1995 Bryant G Devonian Field Bryant G Devonian Field Devonian field Depth: 12,000 ft Perm: md Wells spaced 160 to 640 ac. All stripper wells Early 1995 Decision: horizontal well to boost field production Milled out of existing well-bore Horizontal well encountered virgin pressures 1,800 from wellbore Drilling program; within 2 year, field at record high production Field inspired Hz drilling throughout Permian Basin Base map source: NETL Midland From C.A. Sternbach and W. DeMis, 2017

21 AAPG Address to CSPG Bryant G Field Before, Circa 1994 Devonian Production Before Production 3,000 bo/month 70 mmcfg/month 24 Devonian wells in field

22 AAPG Address to CSPG Bryant G Field After circa 2010 Devonian Wells by 1997 After Production After 80,000 bo/month 1.8 mmcfg/month 48 wells Hz wells From C.A. Sternbach and W. DeMis, 2017

23 AAPG Address to CSPG Bryant G- Devonian Wells the before and after on one plot Before 3,000 bo/month 70 mmcfg/month After 80,000 bo/month 1.8 mmcfg/month Field cum: 6 mmbo, 151 bcfg From C.A. Sternbach and W. DeMis, 2017

24 Hz Wells per Year AAPG Address to CSPG Horizontal Drilling In Permian Takes Off Bryant G From C.A. Sternbach and W. DeMis, 2017

25 Completion Technology Indian Basin & Dagger Draw fields Indian Basin & Dagger Draw fields Cisco-Canyon reservoir (Penn) with high water cut Analogous to CBM de-watering 3 Oil was present but too much water Never economic Solution: install downhole, submersible pumps Move massive volumes of water to bring in oil Result: Rejuvenated Indian Basin and Dagger Draw field Operators copied this technique throughout the Permian From C.A. Sternbach and W. DeMis, 2017

26 Before Circa 1980 Future outline of Dagger Draw field Dashed line. Top Cisco reservoir C.I. = 100 ft Wells produced very high water cut or were P & A within the Dagger Draw Unit Outline IPP: 144 BOPD, 48 BWPD waters out IPP: 150 mcfd, 800 bwpd IPP: 800 mcfd, 20 BO, 850 BWPD IPF: 300 MCFD, 8 BOPD. Goes to 400 BWPD in 18 months. Up-dip offset is P & A Source: DeMis, 2008

27 After 1998 Field had 100s of wells. (Too many to show) Source: DeMis, 2008

28 Production Profiles Monthly Rates Dagger Draw Indian Basin Incremental over base-line is from rejuvenated production Indian Basin field was discovered in 1964, was rejuvenated From C.A. Sternbach and W. DeMis, 2017

29 First Basin-Centered, Tight Oil Resource Play Spraberry Field The Spraberry was known in Midland as the largest uneconomic oil field in the world. Parker and Parsley applied a manufacturing process; involving the service sector and supply chain. Drove down costs Suppliers cut prices for long-term commitment of drilling rigs, large volume purchases of pipe, cementing, frac jobs, etc. at a time when the industry was depressed by low prices Midland From C.A. Sternbach and W. DeMis, 2017

30 # Wells AAPG Address to CSPG Permian Basin Parker and Parsley Spraberry Wells per Year Year From C.A. Sternbach and W. DeMis, 2017

31 Spraberry field: Parker and Parsley Cum Oil: 239 mmbo Cum Gas: 216 mmcfg From C.A. Sternbach and W. DeMis, 2017

32 # Wells AAPG Address to CSPG Permian Basin Parker and Parsley Spraberry Wells per Year Pioneer Acreage: Spraberry & Wolfcamp play Year From C.A. Sternbach and W. DeMis, 2017

33 Wolfberry to Horizontal Wolfcamp Midland Basin Horizontal Wolfcamp Play Started as deepening of Vertical Spraberry Western side of Midland basin Wolfcamp detritus extended into basinal shale wells Horizontal wells Wolfberry inception Midland

34 Wolfcamp Facies & Paleogeography Map Legend Wolfberry inception Modified from Fu, 2011 From C.A. Sternbach and W. DeMis, 2017

35 Spraberry to Wolfberry to Horizontal Wolfcamp Wolfberry Play Hz Wolfcamp Play Spraberry Play Fracture Stimulated Interval Wolfberry : deeper drilling to Wolfcamp and combined with Spraberry, Adding more frac stages Increased recovery per well Woflcamp Horizontal play began in 2011; increasingly longer laterals and number of frac stages drove up EUR per 1000 lateral Modified from Pioneer Natural Resources (2013) and Blomquist, 2016

36 Wolfcamp Geology Midland Basin West East Central Basin Platform Jim Henry, 2012 AAPG Discovery Thinking Presentation; Special thanks to David Feavel

37 Today s Innovation in Delaware Basin Wolfcamp Technology Migration Knowledge of Midland Wolfcamp, Horizontal drilling, resource plays, and completion technology all migrate to Delaware Basin Today s innovations: Steering with seismic Longer laterals More pounds of sand per foot Lateral Length Slickwater More benches defined More laterals/bench Midland From C.A. Sternbach and W. DeMis, 2017

38 Wolfbone is deeper, hotter, more pressure and even more economic

39 Changes in Frac Design Continue to Improve Performance & EUR Higher proppant Concentration: 500 to 1,000 to 2,000 lbs/lateral foot Fluid: Gel to Slickwater Shorter stage length: ' down to ' stages Longer lateral: 4,000 to 7,500 to 10,000 Change is so profound, operators refer to frac generations Gen 4 Today s Type curve Gen 3 Gen 2 The Up-andto-the-left Effect Gen 1 Normalized to 7,500 Nobel Investor Presentation 1/2017

40 Today s Innovations Drive Value Ever-increasing EURs Explosion in lease prices Explosion in Permian Basin deals 2% 10 year ago 1/3 rd of US deals today 30% 20% 10% % Permian Basin Deals (% of US Total) % % % % Modified Houston Chronicle, 2016 & IHS Markit

41 Permian Basin Resilience PRODUCTION UNAFFECTED BY PRICE DROP From the Dallas Federal Reserve, Thanks to Marty Hewitt PRICE DROP

42 Oil Price curves from DeMis, 2016 Trend Exploration 3D Bryant G Dagger Draw/Indian Basin Elm Coulee Parshall Field AAPG Address to CSPG Nominal and Real Price of Oil Many of the Permian innovations were the product of hard times in the oil patch* (*Necessity is the mother of invention) Boom times Bust times Boom times WTI - semi-annual series Real Price (2016 dollars) Nominal Price Spraberry

43 Technology Concepts AAPG Address to CSPG Geophysical Petrophysical Concept & Technology Evolution Seeps & Anticlinal Traps Stratigraphic Traps Resistivity Logs Single Fold Archie s Laws CDP Combined Tools Computing Deep Water Unconventional Landsat 3D Seismic Attributes Pre-Stack Drilling & Completion Rotary Drilling Cemented Casing Offshore Evolution Stimulation Enhanced Multi-Stage Horizontal US Dominated Exploration Global Expansion Post WWII Growth From R.K. Merrill and C.A. Sternbach, 2017 OPEC/ Nationalization Globalization/ Mergers Emerging Countries

44 What Next? CO 2 Flood Rejuvenates Residual Oil Zone Robert Trentham and Stephen Melzer, 2016 Search And Discovery

45 NEW AAPG BOOK GIANT FIELDS

46 US Dominated Exploration US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

47 Global Expansion Global Expansion US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

48 Post WWII Growth Post WW II Growth US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

49 OPEC & Nationalization OPEC/Nationalization US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

50 Globalization & Mergers Globalization/Mergers US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

51 Emerging Countries 2006 Present Emerging Countries US Dominated Exploration From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

52 The Where Journey We Have Continues Been Sediment Thickness in meters From Merrill and Sternbach, 2017 The AAPG Century Giant Fields through the decades

53 Technology Transfer, Then Technology Transfer around the globe. AAPG and other professional societies help transfer oil finding know how Everette Lee DeGolyer Max Steineke J.C. Cam Sproule

54 Technology Transfer, Now Multimedia: increases broadband Learning on demand Team learning Building on our Heritage

55 Legacy of Discovery: Resources for Explorers Charles A. Sternbach

56 Web Resources for Explorers Highlight CLICK 1

57 CLICK 2

58 NEW ON DPA Webpage!

59 The Energy Challenge

60 Prosperity is a Choice Economic Benefit to Society

61 Cleaner, Affordable Energy

62 Unconventional Advantage

63 Save the Date: Feb 28-Mar 2, 2018 Hilton America s Hotel, Houston TX

64 Summary and Conclusion Innovation Centers and Super Basins foster new technology Geoscience is fundamental Professional societies like AAPG & CSPG play a key role in technology transfer Population and Energy Demand are growing We will be focused on Discovery Thinking for a very long time to come!

65 Thank you to the CSPG and the AAPG Canada Region for inviting me to join you today! Thanks also to: Pete Stark Bob Fryklund Henry Pettingill Bob Merrill Bill DeMis Allen Gilmer Michael Porter Boston Consulting Group Chandler Wilhelm Greg Leveille David Feavel Linda Sternbach