The recently released IHS North American Tight Oil study identified 47 billion barrels of technically recoverable oil and condensate resources, most of which could be produced during the next 25 years. Supply models projected that oil and condensate production from these plays would reach a peak of just under 5 million barrels per day by 2023 and would generate 33.7 billion barrels of supply through 2036.

A composite "emerging play" category in the supply model would deliver 2.3 billion barrels or 5 percent of the projected resource. Many have expressed concerns about the viability of this "emerging play" play category and have asked what plays will deliver and how much. Recent industry developments confirm that growth of recoverable resources in established tight oil plays will be capable of meeting or exceeding the supplies in the "Emerging Play" category. See figure 1 below.

Source: IHS North American Tight Oil study

The learning curve
Along industry's learning curve, ingenuity and technology are driving continual process improvements while also unlocking new reservoirs in established plays. Even though the learning curve is comprised of many small steps by multiple operators and service companies the magnitude of the sum of the changes is enormous. The establishment of multiple reservoirs that can be efficiently developed with a combination stacked horizontal laterals from multi-well pads is a major contribution of the learning curve.

This new development paradigm is significantly boosting resources and supplies from key maturing tight oil plays. The following examples illustrate how this new paradigm of growth in established plays will meet or exceed the oil supply contributions of the "emerging plays".

Resource Growth in Established Plays
Bakken - Three Forks play in the Williston Basin already targets two reservoirs - the middle Bakken dolomite and the upper Three Forks in many parts of the play. Continental Resources recently announced that it has successfully tested the second and third Three Forks benches and plans to test the fourth bench. The Charlotte 3-22H well in McKenzie County, ND flowed 953 boe/d from a 9,701 ft. lateral in the third bench.

Based on the substantial flow rates and a large area where multiple Three Forks zones could produce, Continental Resources increased its oil in place estimate for the Bakken - Three Forks play by 57 percent to 903 billion boe. Applying this percent change would increase the IHS technically recoverable hydrocarbon estimate for this play from 11.5 billion boe to almost 18 billion boe - more than double the 3 billion boe estimate for the IHS "emerging plays" category.

A similar stacked pay development strategy also has evolved for other plays including the Niobrara play in the Denver Basin and the Wolfcamp play in the Midland Basin. Leading operators like Noble Energy and Anadarko have successfully tested Niobrara A, B and C zones plus the underlying Codell sandstone in the Denver Basin. They are evaluating various combinations of stacked horizontal wells with longer laterals plus vertical wells to maximize recoveries from this expanding tight oil system.

Based on the confirmation of multiple reservoirs and improved well performance Anadarko increased the estimated recovery from its Niobrara acreage by one third to 1.5 billion boe and Noble Energy increased its estimated Niobrara recovery by 60 percent to 2.1 billion boe. The learning curve has led to the recognition of more than 1.2 billion boe in recoverable resources from the Niobrara play during the past year.

The learning curve in the Midland Basin Wolfcamp shale play may yield even more dramatic results. Since 2004 operators have deepened vertical wells in the Spraberry play to also produce from the underlying Wolfcamp. The term "Wolfberry" was coined to describe these deeper wells that produced from both reservoirs. While economic, recent estimated ultimate recoveries from vertical Wolfberry wells averaged about 122,000 barrels of oil equivalent (Mboe).

Following successes in other tight oil plays, operators launched the first Wolfcamp horizontal wells during 2009. Early results were mixed but the EURs for the best wells were projected to yield about 260Mboe from Wolfcamp A and B zones. Approach Resources recently reported that its wells in the Wolfcamp A and B zones in the southern Midland Basin have the potential to yield 450 Mboe and the C zone also looks promising. Approach Resources improved recoveries by increasing the amount of fine mesh proppant in the highly fractured Wolfcamp shale. They plan multiwall pads with stacked 7,500 ft. laterals to tap all three Wolfcamp zones and vertical wells where appropriate to maximize recoveries from thick sequences of tight sands in overlying and underlying sections.

Pioneer estimates even better Wolfcamp EURs of 575 Mboe in the Southern Midland Basin. Pioneer also plans stacked laterals to produce the Wolfcamp D or Cline shale zone where it is present on its acreage. See Figure 2 below.

In the North part of the Midland Basin Apache reports Wolfcamp EURs of 598 Mboe and also is developing the Cline shale in its stacked horizontal well program.

Because of the geographical extent of the Wolfcamp in the Midland Basin, these developments could launch a "mega play". Two to four Wolfcamp zones may be productive over a 4,000 sq. mile area with an in-place resource that averages more than 100 million boe per mile. The Midland Basin Wolfcamp play may rival the Sprayberry for technically recoverable oil and condensate resources.

In conclusion
These examples illustrate that the upside potential for the continuous improvements along the learning curve in mature fields will exceed the projected resources in the IHS "Emerging Plays". Moreover, the learning curve has the potential to substantially increase currently established recoverable resources in North American tight oil plays.

Posted 5 February 2013

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.