Numerous operators are seeing improved well performance through drilling longer laterals and employing a greater number of frac stages. For instance, EOG Resources, Inc. (NYSE:EOG) has used laterals in excess of 7,000 feet in combination with more than 35 frac stages in the Wolfberry, which yielded 24-hour peak initial production rates greater than 1,500 barrels of oil equivalent per day for several of the company’s wells.
Not surprisingly, IP rates in the Wolfberry are on the rise. Since inception, they’ve averaged approximately 600 barrels of oil equivalent per day (Boepd) but have risen substantially over the past couple of years, coming in at an average of nearly 700 Boepd in the third quarter of last year.
Other major methods that have been extensively employed across the Permian include tertiary recovery methods, such as enhanced oil recovery, or EOR, and secondary recovery techniques such as waterflooding.
EOR has been a favored recovery method for one of the Permian’s largest leaseholder and producer, Occidental Petroleum Corporation (NYSE:OXY). The company uses a carbon-dioxide injection technology in the majority of its Permian operations, which has led to sharp increases in the production potential of older wells. In fact, EOR based on carbon dioxide injection accounts for roughly two-thirds of Occidental’s production in the play.
Waterflooding has also been a popular method among Permian operators, with Pioneer Natural Resources (NYSE:PXD) having made extensive use of waterflood injection technology in the Spraberry formation, which has led to substantial increases in total recovery. And Linn Energy, which has recently developed the Permian into one of its core producing areas as it seeks to increase its oil exposure, has also made use of waterflooding on its Permian acreage outside the Wolfberry.
Final thoughts
As you can see, the Permian is worthy of any energy investor’s attention. In addition to the prevalence of multiple pay zones, the play’s relatively low well costs, strong production rates, and favorable access to transportation infrastructure make it an attractive play. And the use of new technologies and drilling techniques to coax greater quantities of oil from the play has also been met with great success.
Going forward, major pipeline projects expected to go into service this year should provide a substantial boost to the region’s takeaway capacity to the US Gulf Coast. This coming improvement in infrastructure, coupled with production that is expected to grow by 250,000 barrels per day by 2016, should continue to attract a bevy of exploration and production companies into the region.
The article Why You Should Pay Attention to This Texas Oil Play originally appeared on Fool.com and is written by Arjun Sreekumar.
Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool owns shares of Devon Energy.
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