We own a small small interest in Big Chief lease property in the southern Delaware. It’s partially Block 1, sec 173-175. I recently figured out it’s been a big producing property and includes about 10 sections and 32 wells. I believe it was first drilled in 2012.
It looks like there’s roughly 3-4 wells per section at this point. You can see the production jumps up when wells are added and then it tails off. For this area of Reeves county, is 3-4 wells per section about the max or will it likely add more? If it likely adds more wells, about how many wells per section is normal for that area?
It appears these wells have been accessing the Wolfcamp formation so far. Is it likely the oil company will use these same wells to access different layers (different part of Wolf Camp? Bone Springs?) when the production slows down? Does this part of the southern Delaware have other layers to access?
Is it likely this property will play out soon since it’s been producing for over 10 years now? I know no one has a crystal ball, but I’m just trying to get some sort of idea what to expect over the next 5-10 years.
Any input you might have on this would be appreciated.
This is a big crystal ball question. Factors include commodity prices, developing technology, what formations are successful in your area, who the operator is (and in today’s picture who they are being bought by) and how that operator views your asset and their appetite for new development. For wolfcamp, you can expect MANY more years than 10, but you have probably already seen 50-75% of the revenues that you will see from those wells because of the decline curve. Yes, there are more formations than the wolfcamp in Reeves, but it depends on your lease if the operator has rights to develop the other horizons. If they have to go and get new leases, that adds time and expense, which is a deterrent to development. You can get a better picture of ‘what to expect’ by watching the permitting in your area and by your operator. You are in the right place to learn. Good luck!
I didn’t know until recently, go figure, that oil is a renewable asset. That’s why I don’t understand fully why a well goes dry. If it had oil before, it should have oil in the future. We will never run out of oil.
Oil is not renewable in the sense that it will happen during the anyone’s lifetime or even over multiple generations. It takes millions of years. See article from University of Calgary which explains that 70% of oil today was formed 66-252 million years ago. It is the advancement in drilling techniques, such as horizontal wells, which has enabled production from deeper and less porous formations. Oil companies are always working on new technology to produce oil and that keeps production going. If all the oil under a tract is produced out of every formation, there will not be regeneration in that location. Oil formation - Energy Education
This article is about oil migrating from deeper formation through a fault or other opening into a shallower formation. That would be equivalent to the Wolfcamp formation oil moving up into the Bone Spring formation. So the Wolfcamp formation will be depleted by oil-in-place migrating up into the Bone Spring and coming out of an existing well. It would save the oil company from drilling a Wolfcamp well since it could just pump the Wolfcamp oil out of the Bone Spring well. The article is NOT suggesting that brand new oil is being created as that takes millions of years.
Having worked for one of those companies that was doing some of the experimentation during that time frame, we found that allowing some of the wells “to rest” allowed the reservoir to recharge a bit and oil molecules from farther away migrated to more near bore hold locations and then then when the well was turned back on, there was an uptick in volume. The oil was still “old” oil, not newly generated. By cycling on and off, more reserves were recovered.