Largest oil re­serve in NM, Texas

Fed­eral re­port says area con­tains 46 bil­lion bar­rels

Albuquerque Journal - - FRONT PAGE - BY KEVIN ROBIN­SON-AVILA JOUR­NAL STAFF WRITER

South­east­ern New Mex­ico and West Texas are sit­ting on a sea of po­ten­tially re­cov­er­able oil and gas re­serves in the Delaware Basin, ac­cord­ing to a new re­port by the U.S. Ge­o­log­i­cal Sur­vey.

The U.S. De­part­ment of the In­te­rior said Thurs­day that two un­der­ground lay­ers in the Delaware, known as the Wolf­camp Shale and Bone Spring For­ma­tion, to­gether con­tain 46.3 bil­lion bar­rels of oil, 281 tril­lion cu­bic feet of nat­u­ral gas, and 20 bil­lion bar­rels of nat­u­ral gas liq­uids.

That’s the largest pool of oil and gas re­serves ever an­nounced by the USGS any­where in the U.S., pro­pel­ling the Per­mian Basin in New Mex­ico and Texas into the na­tion’s premier zone for en­ergy pro­duc­tion with some of the largest re­cov­er­able re­serves in the world, said New Mex­ico Oil and Gas As­so­ci­a­tion Ex­ec­u­tive Di­rec­tor Ryan

Flynn.

“Even for some­one who un­der­stands the re­sources and po­ten­tial of the Per­mian Basin, I can’t help but be sur­prised by the sheer enor­mity of what the USGS has re­ported,” Flynn said. “The Per­mian re­sources shared by New Mex­ico and Texas make this area one of the most im­por­tant places in the world in terms of oil pro­duc­tion.”

And to­tal re­serves in the Delaware Basin, an oval-shaped for­ma­tion within the Per­mian that stretches from south­west­ern Texas north­ward into Lea and Eddy coun­ties, could be far larger than re­ported. That’s be­cause the USGS looked only at the Wolf­camp and Bone Spring for­ma­tions, or just two of the many lay­ers of hy­dro­car­bon-filled shale rock zones in the Delaware.

“Those are very im­por­tant pieces of the basin, but it’s not the whole thing,” Flynn said. “That’s what makes this re­port so sur­pris­ing, even for us.”

The USGS said its es­ti­mates are for “con­tin­u­ous un­con­ven­tional oil,” mean­ing it’s spread through­out the Wolf­camp and Bone Spring for­ma­tions rather than con­cen­trated in one place. It said the re­serves are “undis­cov­ered,” mean­ing they have yet to be pro­duced, and that they’re “tech­ni­cally re­cov­er­able” with cur­rent tech­nolo­gies.

The USGS re­leased a sep­a­rate assess­ment in 2016 of hy­dro­car­bon po­ten­tial in the Mid­land Basin por­tion of the Per­mian in West Texas. That re­port showed 20 bil­lion bar­rels of un­re­cov­ered oil, 16 tril­lion cu­bic feet of nat­u­ral gas and 1.6 bil­lion bar­rels of nat­u­ral gas liq­uids.

At the time, it was the largest pool of po­ten­tially re­cov­er­able hy­dro­car­bons ever re­ported in the U.S. by the Ge­o­log­i­cal Sur­vey. But the lat­est re­port on the Delaware shows more than twice the level of oil and many times more nat­u­ral gas and liq­uids.

The USGS did not eval­u­ate the prof­itabil­ity of ex­tract­ing the Delaware re­sources out­lined in its assess­ment. But modern tech­nolo­gies of hy­draulic frac­tur­ing, or frack­ing, into hard rock and then bur­row­ing hor­i­zon­tally into pools of oil and gas trapped in dif­fer­ent lay­ers of shale have made pro­duc­tion in the Per­mian, and par­tic­u­larly the Delaware Basin, highly at­trac­tive.

Some of the most lu­cra­tive gush­ers in the U.S. spring from the Delaware, con­vert­ing that zone and other parts of the Per­mian into the No. 1 oil and gas pro­duc­ing re­gion in the U.S. to­day.

“The re­sults we’ve re­leased to­day demon­strate the im­pact that im­proved tech­nolo­gies such as hy­draulic frac­tur­ing and di­rec­tional drilling have had on in­creas­ing the es­ti­mates of undis­cov­ered, tech­ni­cally re­cov­er­able, con­tin­u­ous re­sources,” USGS En­ergy Re­sources Pro­gram Co­or­di­na­tor Wal­ter Guidroz said in a state­ment.

Given the level of in­dus­try ac­tiv­ity al­ready un­der­way in the Delaware, the new USGS es­ti­mates mean New Mex­ico will ben­e­fit from con­tin­ued pro­duc­tion for many years to come, Flynn said.

The oil boom in south­east­ern New Mex­ico has gen­er­ated $1.2 bil­lion in sur­plus, or new money, avail­able for state spend­ing in the next fis­cal year bud­get.

“That sur­plus has the po­ten­tial to be­come the norm, not the ex­cep­tion, as we move for­ward,” Flynn said.

U.S. In­te­rior Sec­re­tary Ryan Zinke said Christ­mas came a few weeks early.

“Be­fore this assess­ment came down, I was bullish on oil and gas pro­duc­tion in the United States,” Zinke said in a pre­pared state­ment. “Now, I know for a fact that Amer­i­can en­ergy dom­i­nance is within our grasp as a na­tion.”

C. CUN­NING­HAM/JOUR­NAL

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