American Oil and Gas Reporter - PBIOS 2014 Official Program Guide - 144

Permian Basin Reports
million. Estimated ultimate recoveries
are more than 350 million barrels of oil
equivalent, and 30-day IPs are around
500 boe/d. The breakdown of oil, gas
and natural gas liquids is fairly liquidsrich at 60, 21 and 19 percent, respectively.
The internal rate of return of 65 percent
is quite good.
Apache already owned the acreage
for other operations, so there is no leasehold cost in this calculation. Even with
lease costs included, the return would be
above 40 percent, which is not bad.
Apache is drilling in a shallow, normally pressured environment that is relatively trouble free. Drilling and completing
a 7,500-foot horizontal at these relatively
shallow depths has a much lower cost
than in the deeper parts of the Midland
and Delaware basins, where the costs
could be $7 million-$10 million.
Unique Opportunity
Hybrids present an opportunity to get
the same attractive rates of return achieved
with vertical wells elsewhere in the Permian Basin. They mix a little bit of conventional and lots of poor reservoir. Production is coming from both very thin
conventional rock stringers and the larger
unconventional rock that lies between.

Where vertical completions would be uneconomic, horizontal wells can be quite
economic.
Sand or carbonate stringers that may
be only a few inches thick are interbedded
within the shale. Production comes from
both. The conventional reservoir provides
an extra boost to move the hydrocarbons,
which is a big help on initial production.
Unconventional wells typically need
an above-normal pressure gradient to
help push the hydrocarbons to the wellbore. On their own, these wells need
either an associated (dissolved) gas component within the rock or artificial lift to
produce well.
The energy derived from associated
gas is less critical in these subcommercial
plays that have a conventional reservoir
component and unconventional rock, because part of the reservoir is decent
enough that fluids can move through it
without needing an extra push. Conventional liquids help move the unconventional.
Most operators in North America are
using slickwater or are alternating slickwater and gel treatments for hydraulic
fracturing, particularly for tight oil or
unconventional wells. Slickwater has an
added polymer to make the water a little

FIGURE 4
Past & Present San Andres Producers
(»44,000 Total; 1,513 Horizontal)

144 THE AMERICAN OIL & GAS REPORTER

thicker to improve its proppant carrying
capability. The alternating treatment is
based on the idea that because sand falls
out so quickly, a bit of gel will move it
farther into the formation.
In the southern portion of the Permian,
operators drill down 2,000-3,000 feet to
the Santa Rosa formation. The water is
brackish and not potable, but is quite
suitable for hydraulic fracturing.
Infrastructure is in place throughout
the Permian, which keeps the cost of developing a hybrid play relatively low. In
the early part of flow back, there is a
little flaring of associated natural gas,
but operators route everything to market
fairly quickly. One of the beauties of the
Central Basin Platform, which has been
drilled heavily and has had many units
formed-from primary production to all
the enhanced recovery efforts-is that
there are ample pipelines, gas lines, saltwater disposal wells, roads, and electricity.
All this makes for a very benign development environment.
San Andres Focus
The San Andres has been a very good
conventional reservoir in places. More
than 44,000 producers have been completed, and well more than 1,500 of those
have been drilled as horizontal wells
(Figure 4).
More than half of the 1,513 horizontal
wells drilled as of May are on the southern
end of the CBP in the world class Yates
Field, where 840 short-radius laterals
have been drilled. Virtually every one of
these was completed open hole with no
casing or lining.
Other horizontals are clumped in old
waterflood fields where the conventional
reservoir is of good commercial quality.
In the center of Andrews County, about
two-thirds the way up the CBP from the
Yates Field, is the Shafter Lake Field.
Much of the San Andres vertical development has been in this area.
The hybrid, horizontal activity in the
San Andres has been outside of traditional
field areas where vertical wells were
completed in good conventional reservoirs.
Horizontals are going in where no other
drilling has taken place. These are areas
where the reservoir rock is of too poor
quality to make a good vertical completion.
American Oil and Gas Reporter - PBIOS 2014 Official Program Guide

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