The U.S. Geological Survey, the federal government’s earth sciences arm, discovered new oil and gas reserves in the Permian Basin – enough to supply the United States for 10 months.
The USGS said Wednesday it found 28.3 trillion cubic feet of gas and 1.6 billion barrels of oil in the Woodford and Barnett shale formations, part of the larger Permian Basin, which straddles West Texas and New Mexico.
The USGS began assessing available petroleum reserves 50 years ago after the Arab oil embargo sent the U.S. into a supply crisis. Domestic oil supplies have exploded since then, especially after fracking ushered in the shale boom in the early 2000s, turning the U.S. into an oil-producing powerhouse.
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But whether the U.S. will have enough oil and gas to meet growing demand in the decades to come has been increasingly in question. Declining availability of shale reserves has begun challenging Houston’s oil companies to explore new areas and deeper formations in order to meet demand projections 10 years into the future and beyond.
“When you hear that there’s increased activity in Woodford, Barnett, what that’s telling you is that they’re looking beyond the sort of traditional landing zones,” said Toti Larson, principal investigator at the Bureau of Economic Geology’s Mudrock Systems Research Laboratory at the University of Texas, which specializes in shale research.
The potential in the area is “massive,” Larson said, but producing these newfound reserves presents new challenges. Larson said he has been studying the area as it is increasingly of interest to the companies involved in his research consortium.
The reserves are deeper than the formations where oil companies traditionally drill. It’s also hotter, meaning there will be more associated gas. Both the depth and the additional gas pose cost challenges to oil and gas producers.
Additionally, in the Barnett, there’s more clay, posing drilling hazards.
“And then the other complexity is just really trying to identify the sort of sweet spots,” Larson said. “Where across the Permian Basin is the Woodford most likely going to produce oil? And so I think that’s what makes the Woodford still an exploration target.”
Flagging oil prices don’t help these exploration efforts, Larson said. But if the price signals change and oil companies increase drilling efforts, the Woodford and Barnett present an untapped opportunity.
