charles a. sternbach aapg president 2017-2018 slides/2… · aapg | address to cspg calgary, canada...
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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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Permian Basin
94 years
Santa Rita #1
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Horizontal Drilling Key to the Pratt
Inflection
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Pick Up trucks also
on the rise!
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Fertile Ground
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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)
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Value Innovation
Blue Ocean Strategy; Kim and Mauborgne 2015
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Wolfcamp Facies & Paleogeography
Powell
Ranch
Map Legend
Modified from Fu, 2011
1
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Trend Exploration: Wolfcamp Production
3D SeismicField Cum: 10.487 MMBO
20 BCFG
1.8 MMBW
3 D Seismic
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Horizontal Drilling In Permian Takes Off
Bryant G
Hz W
ell
s p
er
Year
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
“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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Field had 100s of wells.
(Too many to show)
“After” 1998
Source: DeMis, 2008
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Production Profiles – Monthly Rates
Indian BasinDagger Draw
Indian Basin field was discovered in
1964, was rejuvenated
Incremental over base-line is
from rejuvenated production
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Permian Basin
Parker and Parsley
Spraberry Wells per Year
Year
# W
ells
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Spraberry field: Parker and Parsley
‘80-’85 ‘85-’90 ‘90-’95 ‘95-00
Cum Oil: 239 mmbo
Cum Gas: 216 mmcfg
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Permian Basin
Parker and Parsley
Spraberry Wells per Year
Year
# W
ell
s
Pioneer Acreage:
Spraberry &
Wolfcamp play
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Wolfcamp Facies & Paleogeography
Map Legend
Modified from Fu, 2011
2010 – 2011
Wolfberry
inception
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Wolfcamp Geology – Midland Basin
Central
Basin
Platform
WestEast
Jim Henry, 2012 AAPG Discovery Thinking Presentation; Special thanks to David Feavel
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
From C.A. Sternbach and W. DeMis, 2017
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Wolfbone is deeper, hotter, more
pressure and even more economic
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Permian Basin Resilience
From the Dallas Federal Reserve,
Thanks to Marty Hewitt
PRICE
DROP
PRODUCTION
UNAFFECTED
BY PRICE DROP
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
What Next? CO2 Flood Rejuvenates Residual Oil Zone
Robert Trentham and Stephen Melzer,
2016 Search And Discovery
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
NEW AAPG BOOK GIANT FIELDS
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
US Dominated Exploration 1856 – 1925
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
US Dominated Exploration
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Global Expansion 1926 – 1945
Global Expansion
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Post WWII Growth 1946 - 1970
Post WW II Growth
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
OPEC & Nationalization 1971 – 1987
OPEC/Nationalization
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Globalization & Mergers 1988 – 2005
Globalization/Mergers
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Emerging Countries 2006 – Present
Emerging Countries
US Dominated Exploration
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades”
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Where We Have Been
Sediment Thickness in metershttps://www.ngdc.noaa.gov/mgg/sedthick/sedthick.html
The Journey Continues
From Merrill and Sternbach, 2017 “The AAPG Century–
Giant Fields through the decades
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
• 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
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
• Multimedia: increases broadband
• Learning on demand
• Team learning
• Building on our Heritage
Technology Transfer, Now
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Legacy of Discovery:
Resources for Explorers
Charles A. Sternbach
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Web Resources for Explorers
CLICK 1
Highlight
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
CLICK 2
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
NEW ON DPA Webpage!
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
The Energy Challenge
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Prosperity is a ChoiceEconomic Benefit to Society
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Cleaner, Affordable Energy
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Unconventional Advantage
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
Save the Date: Feb 28-Mar 2, 2018 Hilton America’s Hotel, Houston TX
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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!
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Calgary, Canada – September 12, 2017AAPG | Address to CSPG
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