Cline shale boom gets big time attention

Texas Tribune/NY Times:

About a year ago, talk began circulating in this West Texas town about a huge oil-producing formation called the Cline Shale, east of the traditional drilling areas around Midland.

Then the oilmen and their rigs arrived. Now homes and hotels are sprouting, “help wanted” signs have multiplied, and a major drilling company has cleared land to build an office and equipment yard.

“It is coming, and it is big,” said Greg Wortham, the mayor of Sweetwater, who also serves as executive director of the Cline Shale Alliance, a new economic development group.

The Cline Shale, thousands of feet underground in a roughly 10-county swath, is just one of many little-tapped shale formations in Texas and across the nation, geologists say. That means the potential for oil and gas discoveries is theoretically huge, and the reason is technology. The rock-breaking process known as hydraulic fracturing, coupled with the ability to drill horizontally underground, has allowed drillers to retrieve oil and gas from previously inaccessible areas.

Many shales will be too expensive or too small to develop, especially if oil prices fall or environmental regulations tighten. But in Texas, which is already the top oil-producing state, bullishness about a new era is pervasive.

“We’re back into another phase of wildcatting, like the old-timers,” said Jamie Small, the president of Icon Petroleum, a Midland-based company that has worked in areas including the Cline Shale and another early-stage formation, the Tuscaloosa Marine Shale. Barry Smitherman, chairman of the Railroad Commission of Texas, the state’s oil and gas regulatory agency, has said that oil production in Texas could roughly double by 2020.

Much of Texas’ production in the near future is likely to come from well-known formations like the Eagle Ford Shale of South Texas and the shales of the Permian Basin of West Texas. Figures from the Railroad Commission show that oil production in the Eagle Ford Shale nearly tripled between 2011 and 2012.

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Shale, a fine-grained type of sedimentary rock, underlies much of the nation, according to Mr. Small, a geologist.

In Texas, shales are especially abundant. That is partly because hundreds of millions of years ago, sediment from much of what is now North America washed down toward modern-day Texas, according to Don Van Nieuwenhuise, director of professional geosciences programs at the University of Houston. Marine organisms, from the days when Texas was covered by a shallow sea, were buried and cooked by the earth’s heat and eventually became oil.

“We have one of the thickest sedimentary wedges in the world,” Dr. Van Nieuwenhuise said.

Sedimentary rock in the Gulf of Mexico can reach 50,000 feet in thickness, whereas it is about 3,000 feet thick near the Atlantic coastline, he said. That means that Texas could theoretically drill deeper than current onshore norms of about 10,000 feet to 15,000 feet.

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There is more.

I have been touting the Cline shale for several months and expect to see strong production once drillers get rolling.  The communities over the Cline have been actively preparing for the influx of workers and the infrastructure needs.   Many of these communities had excess housing inventories only 10 years ago as the population dwindled.  They will more than fill up those homes and the hotel business will be as strong as the oil business.  Fast food restaurants will also be busy and having to pay top dollar to get workers.