charles a. sternbach aapg president 2017-2018 slides/2… · aapg | address to cspg calgary, canada...

Calgary, Canada – September 12, 2017AAPG | Address to CSPG

Charles A. Sternbach

AAPG President 2017-2018

Innovation and Discovery Thinking in the Permian Basin

(Prototype Super Basin) and other Super Basins


Outline

• Permian Basin: Prototype Super Basin: Center for Innovation, favorable factors, and 5 innovation case studies

• Technology Transfer; Giant Fields through the decades, modern sharing of best practices, Professional Societies like AAPG and CSPG play a key role

• Social Choices: Energy mix, Economics, Environment, and Prosperity


Permian Basin

94 years

Santa Rita #1


What is a Super-basin?• More than 5 billion Boe cumulative

production

• More than 5 billion Boe remaining production

• Multiple source rocks – petroleum systems

• An assemblage of conventional, shale (continuous) and tight-non-continuous reservoirs

• Stacked pays

• Established infrastructure – access to markets

• Established service sector & supply chains

Modified from Murchison Oil and Gas, 2010,

www.murchisonoil.com/about/permian-basin.html

SW

NE

SW NE

Source: IHSMarkit, Super

Basins – The basins that keep

on giving , Sept. 2016. Leta K.

Smith, Pete Stark, Bob Fryklund

Permian Basin –“super basin” prototype


Permania! What does it mean?

• Assessed 45 formations with mass balance

approach to estimate technically recoverable

resources from the three reservoir

categories.

• Estimated remaining recoverable > 80 billion

bbls, more than twice the cumulative production

to date.

> Shale – continuous reservoirs, dominated

by Wolfcamp account for almost 70% of

the total.

> The combination of horizontal technologies &

innovation have driven a 75% increase in

capital efficiencies over the past 18 months.

> Permian basin competitive at current oil prices

and production ~ 2 MMb/d exceeds the 1976

peak.

> Peak not driven by increase in oil price.

Production

~ 2 MMb/d

Source: IHSMarkit, Super Basins – The basins

that keep on giving , Sept. 2016. Leta K. Smith,

Pete Stark, Bob Fryklund

The “Pratt”

Inflection


Horizontal Drilling Key to the Pratt

Inflection


Pick Up trucks also

on the rise!


Fertile Ground


Global Super Basins

Location of 25 global “Super Basins” with cumulative production and remaining conventional

technically recoverable oil and gas both >= 5 billion boe, multiple source rocks / petroleum systems

plus established infrastructure, services and supply chains

Global Super Basins: Estimated Technically Recoverable ~ 860 Bboe

Source: IHS Energy © 2016 IHS

Permian

Source: IHSMarkit, Super Basins – The basins that keep on giving, Sept. 2016.

Leta K. Smith, Pete Stark, Bob Fryklund


Future for Industry and AAPG

• With 25 onshore Superbasins, the World is

watching the Permian Basin

• Skills and techniques have global application

• These basins may potentially add 860 Billion

Bbls Oil

• Geoscience incremental value add role

• AAPG Strategy: Go where the Oil is

(content, conferences, publications)


Why is the Permian

an innovation Hot spot?

• Fundamentals: key source rocks,

abundant plays, conventional,

unconventional GEOLOGY MATTERS

• Infrastructure, service companies

• Rich petroleum History

• Ability to profit from results

• Economy of Scale

• Social License


Innovation 101

Five Key Skills:

• Associating

• Questioning

• Observing

• Networking

• Experimenting

The Innovators DNA: Mastering the

five skills of disruptive Innovators

Jeff Dyer, et al, 2011

Henry Pettingill, chief geoscientist

at Noble Energy, on left


Value Innovation

Blue Ocean Strategy; Kim and Mauborgne 2015


Permian Basin Innovations:

High-level Case Studies

Case Studies:

1) 3-D seismic in

exploration

2) Horizontal drilling

3) Completion technology

4) First tight oil resource

play - Spraberry

5) Wolfberry to Horizontal

WolfcampBase map source: NETL Midland

1

3

From C.A. Sternbach and W. DeMis, 2017


First Use of 3-D in Exploration - 1990

Trend Exploration

Powell Ranch – Wolfcamp

Play

Before 3D:

• Drilled 14 wells

• 14% success

• 1 Mmbo

After 3D:

• Drilled 42 wells

• 60% success*

• 10 mmboMidland

* Proved 3D was HUGE risk reducer in exploration

1

Base map source: NETL



Wolfcamp Facies & Paleogeography

Powell

Ranch

Map Legend

Modified from Fu, 2011

1



Wolfcamp Isochron and Amplitude Maps

Source: Montgomery, 1996 AAPG Bulletin

Cross section

Isochron

C.I. = 2 ms

Wolfcamp Isochron superimposed over amplitude

data, section 4

Best production: Amplitude dims with isochron thicks



3D Identified prolific channels

800 ft 450 ft

Porosity in

Channel

Facies

Source: Montgomery, 1996 AAPG Bulletin

1000 ft

AMACO

POWELL #8

P&A

L AND B OIL CO.

POWELL “A” #9

P&A

TREND

POWELL #8

1 MMBO

TREND

POWELL #9A

1 MMBO


Trend Exploration: Wolfcamp Production

3D SeismicField Cum: 10.487 MMBO

20 BCFG

1.8 MMBW

3 D Seismic



Horizontal Drilling – 1995

Bryant G Devonian Field

Bryant G Devonian FieldDevonian field

• Depth: 12,000 ft

• Perm: 0.1 – 2 md

• Wells spaced 160 to 640 ac.

• All “stripper” wells

Early 1995

• Decision: horizontal well to boost

field production

• Milled out of existing well-bore

• Horizontal well encountered

virgin pressures 1,800’ from

wellbore

• Drilling program; within 2 year,

field at record high production

Field inspired Hz drilling throughout

Permian Basin

MidlandBase map source: NETL



3,000 bo/month

70 mmcfg/month

19

70

19

80

19

90

24 Devonian wells in field

Bryant G Field – Before, Circa 1994

Devonian Production

“Before” Production


Bryant G Field – After circa 2010

48 wells Hz wells

Devonian Wells by 1997“After” Production

20

00

20

10

“After”

80,000 bo/month

1.8 mmcfg/month



Bryant –G- Devonian Wellsthe before and after on one plot

“After”

80,000 bo/month

1.8 mmcfg/month

Field cum: 6 mmbo, 151 bcfg

“Before”

3,000 bo/month

70 mmcfg/month

19

70

19

80

19

90

20

00

20

10

“After”

80,000 bo/month

1.8 mmcfg/month



Horizontal Drilling In Permian Takes Off

Bryant G

Hz W

ell

s p

er

Year



Completion TechnologyIndian Basin & Dagger Draw fields

Indian Basin & Dagger Draw fields

Cisco-Canyon reservoir (Penn)

with high water cutAnalogous to CBM “de-watering”

Oil was present but too much water

• Never economic

Solution: install downhole, submersible

pumps

• Move massive volumes of water to

bring in oil

Result: Rejuvenated Indian Basin and

Dagger Draw fieldOperators copied this technique throughout

the Permian

3



“Before” Circa 1980

1973 - IPP: 150 mcfd, 800 bwpd

IPP: 800 mcfd, 20 BO, 850 BWPD

1973 - IPF: 300 MCFD, 8 BOPD.

Goes to 400 BWPD in 18

months.

Up-dip offset is P & A

1971- IPP: 144 BOPD, 48 BWPD

“waters out”

Future outline of Dagger Draw field

Dashed line.

Top Cisco reservoirC.I. = 100 ft’

Wells produced very high water cut or

were P & A within the Dagger Draw Unit

Outline

Source: DeMis, 2008


Field had 100s of wells.

(Too many to show)

“After” 1998

Source: DeMis, 2008


Production Profiles – Monthly Rates

Indian BasinDagger Draw

Indian Basin field was discovered in

1964, was rejuvenated

Incremental over base-line is

from rejuvenated production



First Basin-Centered, Tight Oil Resource Play

Spraberry Field

• The Spraberry was known in Midland as “the largest uneconomic oil field in the world.”

• Parker and Parsley applied a manufacturing process; involving the service sector and supply chain.

• Drove down costs– Suppliers cut prices for long-term

commitment of drilling rigs, large volume purchases of pipe, cementing, frac jobs, etc. at a time when the industry was depressed by low prices

Midland



Permian Basin

Parker and Parsley

Spraberry Wells per Year

Year

# W

ells



Spraberry field: Parker and Parsley

‘80-’85 ‘85-’90 ‘90-’95 ‘95-00

Cum Oil: 239 mmbo

Cum Gas: 216 mmcfg



Permian Basin

Parker and Parsley

Spraberry Wells per Year

Year

# W

ell

s

Pioneer Acreage:

Spraberry &

Wolfcamp play



Wolfberry to Horizontal Wolfcamp

Midland Basin Horizontal Wolfcamp Play• Started as deepening of

Vertical Spraberry

• Western side of Midland basin

• Wolfcamp detritus extended into basinalshale wells

• Horizontal wells 2011

2010 – 2011

Wolfberry

inception

Midland


Wolfcamp Facies & Paleogeography

Map Legend

Modified from Fu, 2011

2010 – 2011

Wolfberry

inception



Spraberry to Wolfberry to Horizontal Wolfcamp

Modified from Pioneer Natural Resources (2013) and Blomquist, 2016

Fracture

Stimulated

Interval

“Wolfberry”: deeper drilling to

Wolfcamp and combined with

Spraberry, Adding more frac stages

Increased recovery per well

Woflcamp Horizontal play began in 2011;

increasingly longer laterals and number of

frac stages drove up EUR per 1000’ lateral

Spraberry Play

Wolfberry Play Hz Wolfcamp Play


Wolfcamp Geology – Midland Basin

Central

Basin

Platform

WestEast

Jim Henry, 2012 AAPG Discovery Thinking Presentation; Special thanks to David Feavel


Today’s Innovation in Delaware Basin Wolfcamp

“Technology Migration”

Knowledge of Midland Wolfcamp,

Horizontal drilling, resource plays,

and completion technology all

migrate to Delaware Basin

Today’s innovations:

• Steering with seismic

• Longer laterals

• More pounds of sand per foot

Lateral Length

• Slickwater

• More benches defined

• More laterals/bench Midland



Wolfbone is deeper, hotter, more

pressure and even more economic


Changes in Frac Design Continue

to Improve Performance & EUR

• Higher proppant Concentration: 500 to 1,000 to 2,000 lbs/lateral foot

• Fluid: Gel to Slickwater

• Shorter stage length: 250-300' down to 100-50' stages

• Longer lateral: 4,000’ to 7,500’ to 10,000’

• Change is so profound, operators refer to frac “generations”

Gen 1

Gen 2

Gen 3Gen 4

Today’s Type curve

Normalized to 7,500’

Nobel Investor Presentation 1/2017

The “Up-and-

to-the-left”

Effect


Today’s Innovations Drive Value

• Ever-increasing EURs

• Explosion in lease prices

• Explosion in Permian

Basin deals

– 2% 10 year ago

– 1/3rd of US deals today

’06 ‘07 ’08 ‘09 ’10 ’11 ‘12 ’13 ’14 ’15 ‘16

2010

16%

2006

1.8%

2011

7.2%

2016

38%

2014

23%

Permian Basin Deals (% of US Total)

30%

20%

10%

Modified Houston Chronicle, 2016 & IHS Markit


Permian Basin Resilience

From the Dallas Federal Reserve,

Thanks to Marty Hewitt

PRICE

DROP

PRODUCTION

UNAFFECTED

BY PRICE DROP


WTI - semi-annual series

Nominal and “Real” Price of OilMany of the Permian innovations were the product of hard times in the oil patch*

(*Necessity is the mother of invention)

Real Price

(2016 dollars)

Nominal

Price

Boom times Boom times

Bry

ant

G

Tre

nd E

xplo

ration 3

D

Dagger

Dra

w/I

ndia

n B

asin

Bust times

Elm

Coule

e

Pars

hall

Fie

ld

Spraberry

Oil

Price

cu

rve

s fro

m D

eM

is, 2

01

6


0

10

20

30

40

50

60

70

80

Concept & Technology EvolutionC

on

cep

ts Seeps & Anticlinal Traps

Deep Water

Stratigraphic Traps

Petrophysical

Unconventional

Tech

no

log

y1850

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

Rotary Drilling

GeophysicalSingle Fold

Pre-Stack

3D Seismic

Landsat

CDP

Attributes

Drilling &

CompletionStimulation Multi-StageEnhanced

Horizontal

Offshore Evolution

Cemented Casing

Resistivity Logs

Archie’s Laws

Combined Tools

Computing

US Dominated Exploration OPEC/

Nationalization

Globalization/

Mergers

Post WWII GrowthGlobal Expansion Emerging

Countries

From R.K. Merrill and C.A. Sternbach, 2017


What Next? CO2 Flood Rejuvenates Residual Oil Zone

Robert Trentham and Stephen Melzer,

2016 Search And Discovery


NEW AAPG BOOK GIANT FIELDS


US Dominated Exploration 1856 – 1925

US Dominated Exploration

From Merrill and Sternbach, 2017 “The AAPG Century–

Giant Fields through the decades”



Global Expansion 1926 – 1945

Global Expansion





Post WWII Growth 1946 - 1970

Post WW II Growth





OPEC & Nationalization 1971 – 1987

OPEC/Nationalization





Globalization & Mergers 1988 – 2005

Globalization/Mergers





Emerging Countries 2006 – Present

Emerging Countries





Where We Have Been

Sediment Thickness in metershttps://www.ngdc.noaa.gov/mgg/sedthick/sedthick.html

The Journey Continues


Giant Fields through the decades


• Technology Transfer around the globe.

• AAPG and other professional societies

help transfer oil finding “know how”

Technology Transfer, Then

Everette Lee DeGolyer Max Steineke J.C. Cam Sproule


• Multimedia: increases broadband

• Learning on demand

• Team learning

• Building on our Heritage

Technology Transfer, Now


Legacy of Discovery:

Resources for Explorers

Charles A. Sternbach


Web Resources for Explorers

CLICK 1

Highlight


CLICK 2


NEW ON DPA Webpage!


The Energy Challenge


Prosperity is a ChoiceEconomic Benefit to Society


Cleaner, Affordable Energy


Unconventional Advantage


Save the Date: Feb 28-Mar 2, 2018 Hilton America’s Hotel, Houston TX


Summary and Conclusion

• Innovation Centers and Super Basins foster

new technology

• Geoscience is fundamental

• Professional societies like AAPG & CSPG

play a key role in technology transfer

• Population and Energy Demand are growing

• We will be focused on Discovery Thinking for

a very long time to come!


Thank you to the CSPG and

the AAPG Canada Region for

inviting me to join you today!Thanks also to: Pete Stark

Bob Fryklund

Henry Pettingill

Bob Merrill

Bill DeMis

Allen Gilmer

Michael Porter

Boston Consulting Group

Chandler Wilhelm

Greg Leveille

David Feavel

Linda Sternbach

charles a. sternbach aapg president 2017-2018 slides/2… · aapg | address to cspg calgary, canada...

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