Permian Basin 2017

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PERMIAN BASIN: OVERVIEW 12 | November 2017 | now, compared to three million pounds a few years ago. Fairmount Santrol announced in July that it would be opening another sand mine in the Perm- ian Basin. Other companies are pursuing new sand mines, including Smart Sand, Hi-Crush, Preferred Sands, U.S. Silica, Emerge Energy Services and Unimin Corp. Horizontal San Andres play on CBP About 30 Bbbl of oil have been produced in the Perm- ian Basin and about 55% of that was from the CBP. A newer horizontal play is underway in the conventional San Andres Formation, which is a dolomite. Just applying horizontal drilling and long lat- erals to a conventional rock makes it attractive, explained Steward's Taylor said. "It is interesting that we developed such amazing technologies and techniques and then applied them to some of the worst rocks in shale plays." The San Andres is a shallow formation at a depth of 4,000 ft to 5,000 ft. Operators are tap- ping the residual oil zones and transitional zones below and between the legacy fields in the CBP and Northwest Shelf. The play has a breakeven oil price under $20/bbl, which makes it attractive. "Costs for a 1-mile lateral are changing right now because of the cost structure going up," said Terry Dobson, president and CEO of Elk Mead- ows Resources LLC. "A year ago we were at $2.3 million to $2.4 million for a 1-mile lateral. [In July 2017] we're probably looking at $2.8 million to $2.9 million. A lot of those costs are going up on the completion side." Since the San Andres is a conventional forma- tion, the completions are not as complex. Ring Energy has 18 to 22 stages in its 1-mile laterals. The company pumps about 440 lb of 20-40 white sand per lateral foot. In its most recent well Pacesetter Energy LLC pumped 44 stages with a single cluster per stage in a 10,000-ft lateral. The company used roughly 24 perforations per stage. It pumped 160,000 lb of sand per stage, which was about 600 to 700 lb/ft, said Josh Bryant, vice presi- dent of engineering and project development for Pacesetter. "I think the future of this play will include defining which intervals of the San Andres Forma- tion are the most productive and cost effective to target," he said. n The sun sets behind a grid of power poles and pumpjacks pulling oil from the San Andres play on the north end of Denver City, Texas. (Photo by Tom Fox, courtesy of Hart Energy's Oil and Gas Investor)

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