Houston — The US' Permian Basin of West Texas and New Mexico is probably only in the "second or third inning" of its full development potential, the CEO of one of the largest Permian operators said Tuesday.
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Two prolific Permian horizons -- the Spraberry and Wolfcamp in the eastern part of the basin -- contain about 75 billion barrels of equivalent recoverable oil, while the western part of the basin holds another 25 billion barrels recoverable, Pioneer Natural Resources CEO Scott Sheffield said during an upstream panel at IHS CERAWeek.
Pioneer released the 75 billion boe figure in May 2014, up from its previous estimate of 50 billion boe in May 2013.
"The Permian is probably in its second or third inning [of development]," Sheffield said.
Pioneer has 10 billion boe over 20,000 locations, he said.
Sheffield noted the Bakken Shale in North Dakota and Montana contains another 25 billion boe at least, while the Eagle Ford Shale in South Texas contains another 25 billion boe.
That all adds up to 150 billion boe of recoverable resources added from three giant shale plays, he added, which really only began to be developed unconventionally in the last four to five years.
"These are essentially the four largest fields [in the US]," Sheffield said.
Before the OPEC meeting in late November that caused the price of oil to drop drastically after the cartel declined to cut production, the Permian had 15% of the global rig count, or about 550 rigs. The Spraberry formation was about half that, or 7% alone, Sheffield said.
About 10 Permian zones have been successfully drilled, Sheffield said. All the zones are around 200-500 feet thick.
Basin production hit 2 million b/d in the early 1970s, declined to under 1 million afterward and in the last couple years climbed back to 2 million b/d.
"We had estimates the Permian last year could grow 5 [million]-6 million b/d long term," Sheffield said. "According to the latest EIA estimate, it's the only [US] field that's growing."
About 240 rigs still operate in the Permian, mostly horizontal rigs.
Pioneer is the largest operator in the eastern Permian, which is known as the Midland sub-basin.
Sheffield said a lot of small independents, as many as 1,000, operate in the Permian. Pioneer had been testing as many as six or seven zones, including the deeper Atoka and Strawn, but now focuses its attention to just the Wolfcamp "B" formation, which he called the "most prolific in our areas."
Meanwhile, John Hess, CEO of Hess Corp., said that like Sheffield and other large shale operators, Bakken producers such as his company are also driving down costs and drilling times.
"We've been able to drive our drilling and completion costs down 50% without cost reductions from our supply chain," Hess said, referring to cost concessions of 10%-20% recently granted on average by service and equipment suppliers. Producers have petitioned these cost cuts to make their operations more economic.
Hess said his company is seeing cost reductions of 15%-30%.
--Starr Spencer, firstname.lastname@example.org --Edited by Jason Lindquist, email@example.com