News starting to slip out on West Texas shale potential

Fuel Fix:

The Texas oil industry for several decades seemed headed into territory best described by the old saying “all hat and no cattle.”

But the state appears awash again in oil and gas, with drilling in fields across the state, including one West Texas shale formation that could dwarf both the Eagle Ford Shale in South Texas and North Dakota’s famous Bakken Shale.

Texas recently had 839 drilling rigs operating — nearly half of all rigs in the U.S. and 22.7 percent of rigs worldwide, according to the Feb. 15 Baker Hughes Rig Count.

And most of those rigs were working in five regions of the state: the Permian Basin in West Texas, the Eagle Ford Shale in South Texas, the Granite Wash in the Panhandle, the Barnett Shale in North Texas and the Haynesville Shale in East Texas.

“You’d be hard pressed to find anybody who saw this coming,” said economist Karr Ingham, noting that there are more drilling rigs in the Permian Basin than during the 1980s boom. “That’s a stunning turn of events right there.”

West Texas has a multitude of overlapping oil fields, but the Cline Shale has created a stir. The formation runs about 140 miles north to south and about 70 miles wide through Howard, Glasscock, Reagan and Sterling Counties.

Early estimates for the Cline, based on Devon Energy’s exploration in the area, put the estimated recoverable reserves at 30 billion barrels of oil.

By comparison, the U.S. Geological Survey estimates the Eagle Ford holds up to 7 billion to 10 billion in recoverable reserves, while the Bakken Shale could hold as much as 4.3 billion barrels of recoverable oil.

Benjamin Shattuck, an analyst with Wood Mackenzie in Houston, said just 80 to 100 wells have been drilled in the Cline, and data is sketchy so far. He expects the industry in six months will have twice as much information on Cline Shale as it does now.

“Operators are doing their best to keep the result confidential,” he said. “The big thing in the Cline is that results so far have been good.”

Peggy Williams, editorial director with Hart Energy, said the Permian Basin, with more than 400 drilling rigs operating, is the most complex field in the state, with both horizontal and vertical drilling in multiple geologic horizons. The formations are so thick that they’re using vertical hydraulic fracturing, the process of using water, sand and chemicals pumped at high pressure to break open dense rock.

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I think the estimate on the Cline shale is pretty conservative.  I have seen other estimates showing it to be a very and deep formation that could have 10 times as much production as the Eagle Ford.  The effected counties are already planning for infrastructure improvements that will come with major development of the region.  The Wolfcamp shale in the Permian Basin is also looking very productive.  It is part of the complex oil and gas play in the region.

The rig count data demonstrates how Texas is doing a better job of developing its oil and gas potential than some areas such as California's Monterey shale which is supposed to be huge, but it is hampered by California bureaucracy and the anti energy left.  New York has a paranoid reaction to the development of shale gas that is making Pennsylvania prosperous just across the border.