Geological assessment usually doesn’t become a part of public conversation; however, the USGS’s new evaluation of the large-scale deep shale formations in the Permian Basin is drawing attention to the area again. At first glance, these results appear ordinary, but the magnitude of resources that are being discovered implies there may be additional significant amounts of potential resources buried beneath some of America’s largest oil-producing areas.
A normal release from the USGS – until you see the scale of the resources determined
The USGS estimates that the Woodford and Barnett Shale formations in the Permian Basin contain 1.6 billion barrels of undiscovered oil and 28.3 trillion cubic feet of undiscovered natural gas that can be recovered through technical means.
Although the release appears similar to the releases over the years, the depths of the Woodford and Barnett Shale formations are approximately 20,000 feet below the formations that have been drilled and completed for current production in the Permian Basin. Therefore, the reason the resources were not previously explored was due to the lack of technological capability to access them prior to the use of horizontal drilling and hydraulic fracturing, in order to make the development of those resources technologically possible.
The difference is dramatic: since the late 1990s, the Woodford and Barnett Shale have produced only 26 million barrels of oil, which equates to one day of domestic consumption of crude oil. However, the USGS has indicated that there are billions of barrels of oil located in deeper shale horizons that were not previously known to exist.
Therefore, the finding is important because it provides insight into a new chapter of the history of the Permian Basin that will likely need to be written in the future.
The assessment provides insight into potential energy sources to be tapped in the future
The assessment comes at a time when the rate of increase in U.S. shale production is slowing down, therefore increasing the importance of geological assessments such as the USGS assessment of the Permian Basin. As reported by the USGS Director Ned Mamula:
“The study identifies resources that the industry hasn’t discovered yet, and the study is a long-running effort by the Federal Government to identify potential future energy sources.”
However, each of the formations is also characterized by a number of different challenges. Those challenges include the great depth of the formation, high temperatures in the formation, and, for the Barnett Shale, a relatively high clay content. Each of those characteristics poses operational challenges to extracting the oil from the formation. Those characteristics indicate that the resources are technically recoverable, but they are not necessarily economically recoverable in their current state.
However, even though the resources may not be economically recoverable in their current state, assessments such as the one conducted by the USGS provide valuable input into the long-term planning activities of producers, government regulatory agencies, and other stakeholders, including identifying potential areas of future exploration activity and areas where additional pipeline or processing facilities may be required.
What the study indicates about the future of the Permian
The USGS identified nine assessment units in the Woodford and Barnett Shale formations, providing a detailed map of the locations where deeper unconventional drilling opportunities may exist. The USGS did not attempt to predict when or if any of the identified drilling opportunities would be pursued.
However, the size of the identified resource reserves suggests that the Permian Basin’s long-standing reputation for continuous innovation and renewal may extend further into the future, with existing horizons being replaced by new ones as technology continues to evolve.
The USGS report points to substantial, untapped shale reservoirs underlying the Permian’s most developed regions. Although the economic feasibility of recovering those resources remains uncertain, the sheer magnitude of the identified undiscovered volumes encourages a greater level of enthusiasm regarding the potential nature of the next stage of the basin’s continued evolution.
