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American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.
This paper was prepared for the 43rd Annual Fall Meeting of the Society of Petroleum Engineers of AIME, to be held in Houston, Tex., Sept. 29-Oct. 2, 1968. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon request to the Editor of the appropriate journal provided agreement to give proper credit is made. provided agreement to give proper credit is made. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.
During the past several years the oil industry has developed large gas reserves in the Delaware-Val Verde Basin. This effort required a large investment in men and material.
A minimum of 18,300 billion cubic feet of gas has been found and developed for an expenditure of 775 million dollars in direct costs. The rate of return on this investment should equal 9%, which is less than the average rate of return derived from all investments by domestic producers.
The current discovery rate promises important new reserve additions. However, as the more obvious features are drilled the undiscovered accumulations will become harder and harder to find. This factor plus the current inflationary trend for goods and services is expected to hold the rate of return at its present level.
Eighteen years ago the exploration emphasis in the Delaware-Val Verde Basin shifted from the search for shallow (2,500' to 6,000') Delaware Sand stratigraphic oil to the deep gas bearing Devonian and Ellenburger structural traps (12,000' to 25,000'). An early success at Puckett, coupled with the discovery of Brown Bassett a few years later, soured the oil industry into a massive campaign to find more Delaware Basin gas. Cash outlays for geophysical coverage, leases, and exploratory drilling nave been tremendous.
Are gas reserves being found in sufficient quantities to justify this large outpouring of money? If so, will industry obtain an adequate rate of return on its investment? What is the current trend of the exploratory success ratio? To answer these questions has been the primary purpose of this investigation.
A geographic area containing the elongated geosyncline known in the industry as the Delaware-Val Verde Basin was outlined. (Shown by Figure 1.) Beginning in 1950 and continuing through 1967, all investment directed toward finding and producing hydrocarbons in this area from formations of Wolfcamp age and older was accounted for by year.
Since selling its assets in the Marcellus in 2014, PDC Energy has undergone a major strategic shift in its hydraulic fracturing operations, focusing primarily on its acreage in Colorado's Wattenberg field while entering the Delaware Basin in west Texas. As the independent exploration and production company enters the third year of this new operational focus, its top executive said there is plenty of reason for optimism. Speaking at a luncheon co-hosted by the Independent Petroleum Association of America and the Texas Independent Producers and Royalty Owners Association, PDC President and Chief Executive Officer Bart Brookman gave an overview of recent developments at the company. Brookman described the Wattenberg as a highly productive region for PDC, and that the company hopes to increase efficiency in the operation of its 96,000 acres. Brookman said the company plans to drill each new well with monobore technology, saving approximately 1 day in spud-to-release times.
Yet another SPE paper has concluded that old wells outperform new ones, but this study offers a lot more detail about development in the Permian. The paper, authored by Schlumberger (SPE 194310), offers comparisons of five major plays in the Midland and Delaware basins, including details down to the pounds of proppant pumped per foot, that show that completions are becoming increasingly similar. "In general, normalized production from child wells is lower than parent wells," said Wei Zheng, production stimulation engineer for Schlumberger. Older wells outperform newer ones even when adjusting for the fact that new horizontal wells extend further through the reservoir and more proppant is pumped. "We are getting the same result as 5 years ago when we were spending less," she said during a presentation at the recent SPE Hydraulic Fracturing Technology Conference.
American Institute of Mining, Metallurgical and Petroleum Engineers Inc.
The discussions and postulations in this paper are confined to formations of Wolfcamp paper are confined to formations of Wolfcamp age and older. The exploration of the Delaware basin has not followed the normal pattern of basin development. Expensive pattern of basin development. Expensive drilling costs, carbon-dioxide gas distribution, the uncertainty of future gas prices, lack of deep subsurface data, and difficulty with seismic interpretations have caused an erratic development. In addition, the Delaware basin has had to share the exploration dollar with the Val Verde basin. The first significant deep gas reserves were proven in the Val Verde basin and it was nearly 10 years before any promising reserves were found in the Delaware basin. The authors have combined data on the Delaware and Val Verde basins in order to obtain a better development history. Based on reserve prediction methods as developed by Hendricks and Moore, it is estimated that approximately 100 trillion cu ft of gas in place ultimately will be discovered in the place ultimately will be discovered in the Delaware-Val Verde basins.
In all probability, future exploration in the Delaware basin will continue to be spasmodic. Most of the new drilling in the immediate future apparently will be concentrated in the Val Verde basin once again. Although the southern part of the Delaware basin undoubtedly will continue to receive its share of exploration interest for a number of years, the northern portion offers the larger area with deep gas potential still relatively untested. It is logical to expect this area to receive its share of attention in future years.
The future exploration prospects of any geological basin are difficult, at best, to evaluate, and pertinent geological knowledge of the area is essential. A review of the methods used by recognized authorities reveals that the best predictions are based on either a long history of reserves discovered or cumulative production. A production history of the production. A production history of the Delaware basin is almost nonexistent since most of the giant gas discoveries still are awaiting pipeline connections. By industry standards, a pipeline connections. By industry standards, a giant discovery contains over 1 trillion cu ft of gas. A comparison of discovered reserves by year of discovery does not make a satisfactory historical plot because the giant discoveries fall in a recent five-year period.
To obtain a better history, the authors have combined the Val Verde and Delaware basins, since both basins have the same geological characteristics and should be considered joint in any study of this nature.
This study is confined to reserves in formations of Wolfcamp age and older.