FORT WORTH, Texas -- The Permian Basin has a long history of producing oil, and that history is continuing with unconventional development in the play. According to John Christmann, executive vice president and COO of Apache Corp. (NYSE: APA), the most active driller in North America, the Permian is a “big play getting bigger.”
While speaking at Hart Energy’s recent DUG Permian conference, he noted that the play is one of the four core areas that the company is focused on. Along with Canada’s Montney/Duvernay plays, the Canyon Lime and the Eagle Ford, the Permian is expected to help Apache increase its liquids production by 12% to 16%.
“We’re hitting on all cylinders,” Christmann said in reference to the company’s increased production and lower costs, thanks to improved drilling techniques.
Apache plans on spending $5.4 billion in exploration and production in 2014, with 47% of this budget allocated toward the Permian. In first-quarter 2014, the company was the most active driller in the play, with 38 rigs and 196 well completions. This resulted in an increase of 150,000 barrels of oil equivalent per day (boe/d) in the quarter, up 25% from the previous year’s quarter.
“The Wolfcamp’s Barnhart Field has helped shape our strategy in the Permian as it proved our development concept and moved into development mode,” he said. Since third-quarter 2012, the company has drilled 119 wells in the field, with 95 still on production.
Between 2012 and 2013, Apache reduced drilling costs by 26% while also cutting drilling times and improving production rates. These improvements have been backed by the company’s move to pad drilling, reduced geosteering, optimal casing points, oil-based mud and advanced horizontal drilling practices. For 2014, the company is directing six rigs to the field.
According to Christmann, there is more room to improve costs and production levels, as the company is now self-sourcing frack chemicals and sand, while improving wireline and drill-out efficiency and applying new learnings from field trials.
These lessons are being applied to its drilling operations in the Wolfcamp’s Southern Midland Basin, which is targeting the Upper, Middle and Lower Wolfcamp and Cline Shales through drilling in Midland, Reagan and Upton counties. So far, Apache has drilled 40 wells in the basin, including 28 in 2014. Most of the drilling has been horizontal, and new 3-D seismic mapping was utilized.
The company is also experiencing improvements in regions like the Central Basin and Northwest Shelf, which were conventionally drilled in the past.
Christmann said that Apache is planning to drill 328 wells in these regions in 2014, 105 of which will be horizontal. The areas of these plays that are expected to hold the most horizontal drilling potential are the Three Bar, Monahans and Augusta Barrow Fields.
“The Permian’s not a one-trick pony. We have more formations and multiple basins to continue to produce. The nice thing about this basin is everything is stacked that creates multiple plays and multiple targets in every net acre you own,” he said.
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