A new geological survey has revealed the biggest continuous oil field ever discovered in the America hidden under west Texas.
The Midland Basin, of the Wolfcamp Shale area in the Permian Basin, has an estimated 20 billion barrels of oil – worth up to $900 billion – and 1.6 billion barrels of natural gas, according to the US Geological survey.
The discovery is nearly three times larger than the shale oil found in 2013 in the Bakken and Three Forks formations in the Dakotas and Montana, said Chris Schenk, a Denver-based research geologist for the agency.
The oil, which is contained within layers of shale, is worth around $900 billion based on the current market price of oil.
Yet, oil companies will have to pay for the extraction and processing of the oil. While experts predict that only 50 to 60 per cent of the oil will be recoverable, Forbes reports.
So the net profits of firms attempting to tap the oil reserves will likley be considerably less – although oil prices are always subject to change and could buck the downward trend in prices in the future.
Geologists explain that oil recovered from shale rock is considered unconventional compared to other oil found in the ground because extracting it requires advanced drilling or recovery methods, such as hydraulic fracturing.
The Wolfcamp Shale is part of the sweeping and energy-rich Permian Basin, which encompasses the cities of Lubbock and Midland — 118 miles apart — and includes a series of basins and other geologic formations in West Texas and southern New Mexico. It’s one of the most productive oil and gas regions in the U.S.
Ken Medlock, director of an energy-studies program at Rice University in Houston, said it seems ‘likely that we’re seeing the birth of a new Permian Basin.’
The advent of horizontal drilling, hydraulic fracturing and other advancements will allow for the removal of shale oil at a volume that will make the basin ‘the dominant onshore platform for oil production,’ he said.
Schenk said it’s been known for years that the region could yield new bountiful oil production, but it took the U.S. Geological Survey time to assess the Wolfcamp Shale and estimate the volume of that production.
‘We think the potential is there for the future, and it’s not going to be realized overnight,’ he said.
‘Even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,’ Walter Guidroz, coordinator for the USGS Energy Resources Program said in a statement.
‘Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world.’
The release issued by the Geological Survey on Tuesday hints at the resurgence the oil and gas industry likely will see in Texas in the coming years following a downturn during which energy prices tumbled and tens of thousands of jobs were lost.
‘The fact that this is the largest assessment of (unconventional) oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,’ Walter Guidroz, coordinator of the agency’s energy resources program, said in the release.
Oil has been produced in the Wolfcamp area since the 1980s by traditional vertical wells. But oil firms have begun using horizontal drilling and hydraulic fracturing to access the oil reserve.
Medlock explains that there are multiple shales that interlock, with Wolfcamp being just one, so it’s expected that future drilling will unlock other oil fields that will be comparable to this week’s assessment by the Geological Survey.
There are a number of factors that will determine how quickly oil is extracted from the Wolfcamp Shale, he said, but it will likely take years before any significant amount is gathered. The rate of production largely depends on technology, the cost to drill and oil prices, he said.
While the speed of production remains a question mark, what Medlock doesn’t doubt is the economic benefit that will follow.
‘The revival of the Permian Basin is going to last a couple of decades,’ he said.
However, the current low price of oil – around $46 a barrel – means that it will likley stay untapped until the price increases.