Oil Literacy



" The United States needs to keep its international commitments consistent with the limits of its resources." Walter Lippmann


Two estimates of "technically" recoverable Wolfcamp, Spraberry and Bone Springs resources were done by the USGS in 2016 and 2018 that placed over 70 Gbo of tight oil in the Midland and Delaware sub-basins. Those assessment boundaries are significantly larger than the actual delineated extent of the HZ tight oil plays, above.



As American's get bombarded, daily, with propaganda about the future of tight oil in our lives, how it can still make us "energy independent," that we have enough tight oil to help the rest of the world thru this time of crisis, remember, please...just because you read about it on the internet does not make it true. Nobody much cares anymore whether what they say is a lie or not as long as what they say... benefits them.


Crude quality matters and US tight oil cannot replace most US oil imports. Russian Ural, for instance, like all middle gravity, sulfur-based postings is vital to diesel production in the US. The tight oil industry wants you to believe its the magic fix to everything, so you will give it more money to drill, baby drill, but the truth is America will always need oil imports and be dependent on certain crudes from around the world. Diesel is five bucks a gallon in S. Texas and the 'r" word is being whispered around these parts, by the way. As shale oil gets lighter, diesel is going to get tighter.


All the additional tight oil production folks are crying for over and above 4.8-5.0 MM BOPD has to get exported to foreign countries...there is nothing we can do with it here in the United States. We export between 2.7 to 3.5 MM BOPD of US tight oil (EIA); its put on ships and sails away, never to be seen again.


6-7 counties in the Permian Basin represents ALL of America's oil future.



Do we have that tight oil to spare in the US ?

In one of the five most productive counties in the Permian Basin (Eddy), look what's happening to well quality by that counties biggest operator (Exxon), above.



All of America's oil eggs now lie in the Permian Basin basket where 39,000 HZ wells have already been drilled, well productivity and EUR's are waning, gas to oil ratios are going thru the roof, and there is so much produced water associated with Permian tight oil production they can't hardly find a place to inject it anymore. Wells in the Permian are already drilled so close to each other they interfere with each other when frac'ed.


The productive limits of both sub-basins in the Permian Basin are fully delineated and most of the "technically recoverable" resource estimates that make Americans feel so warm and fuzzy about their oil future will never be produced, at any price. The USGS assessment areas in both sub-basins have lots of goat pasture in them. Case in point: Alpine High in Culberson County.


I am not smart enough, or wealthy enough, not a big enough shale oil producer to get on CNBC and tell the truth about resource depletion. Nobody would believe me anyway because its not good news and that is ALL people want to believe in these days. Thinking past next week and the possibility of resource scarcity in the Permian Basin is beyond most people's comprehension. I've watched and dealt, personally, with a check book; my wells, fields and plays decline and deplete into nothing the past 50 years. The same is coming for the HZ Permian play, trust me. It did, prematurely, in the Williston and Eagle Ford Basins, if you don't think it will in the Permian, prematurely, you are foolin' yourself. We CAN use this HZ tight oil over time, it is vitally important to our long term energy security; why export 3 MM BOPD of the stuff (80+% of all Permian HZ tight oil production)...that's dumb.


Being oil literate requires that you understand all oil is not created equal; there are different qualities of the stuff that really matter. Lots of people with an agenda want that kept a secret.



In another of the five most productive counties in the Permian Basin, Midland County, look at well densities, above. All of those sections containing vertical Spraberry wells (single dots) essentially eliminate the lower Spraberry from ever getting HZ wells drilled into it and create massive drilling and completion problems for HZ Wolfcamp wells. Same problem exists in Howard and Martin Counties. If Tier 2 and 3 stuff was good stuff, why hasn't it already been drilled? Why are they still high grading the shit out of Permian core areas at $110/$5 ?