As E&Ps scour the globe for oil and gas discoveries, experts believe exploration in the U.S. Lower 48 will continue to play an important role.
Companies including EOG Resources and Comstock Resources are drilling wells in some emerging areas around the Lower 48.
Natural gas production is growing from EOG’s emerging Dorado play in the far southern Eagle Ford Shale. With U.S. natural gas prices down significantly from last year, EOG is considering delaying completions in the Dorado play later this year, the company said during its first-quarter earnings.
EOG is also investing in drilling in the southern Powder River Basin and in the company’s new position in the Ohio Utica Combo play, which was unveiled last year.
EOG’s drilling efforts in the Ohio Utica Combo could effectively redefine what the oil window looks like in the Utica, said David Deckelbaum, managing director and senior analyst with TD Cowen, during Hart Energy’s SUPER DUG conference.
Comstock and Aethon Energy are both prospecting and drilling gas wells in Robertson County, Texas, north of Houston. Comstock calls the emerging prospect its “Western Haynesville” play.
“End markets make things really interesting, whether that’s gas in Robertson County and the pull of LNG on that in the 2030s,” said Robert Clarke, vice president of upstream research at Wood Mackenzie, during the conference. “Maybe it’s areas like the Midwest and folks taking another look at the Three Forks.”
RELATED
Newest Giant North Houston Bossier Wildcat Won’t Sputter Out
But many of the new plays in the Lower 48 aren’t really new plays at all – they’re just deeper zones, Deckelbaum said.
The Permian Basin’s deeper Barnett, Woodford and Meramec zones have been popularly discussed by large companies such as Occidental Petroleum, Pioneer Natural Resources, Marathon Oil, Diamondback Energy and Continental Resources.
The Mississippian-age Barnett and Woodford zones lie beneath the Permian’s popular targets for oil—the Wolfcamp and Spraberry zones.
As Pioneer Natural Resources looks to deepen its inventory depth in the Permian, the company has set aside between $150 million and $200 million for exploration activities this year, including drilling four wells in the deeper Barnett and Woodford.
The company’s four Barnett/Woodford wells planned for this year will be between 11,000 ft and 12,000 ft, Pioneer President and COO Rich Dealy said in an interview with Hart Energy last month.
Hunting for oil
Despite growing long-term demand for natural gas, approximately two-thirds of new global final investment decision volumes are for oil, according to Wood Mackenzie data.
Not only is the majority of exploration capital spend weighted toward oil, oil-focused projects tend to pay back faster than gas-focused exploration, Clarke said.
Capital spending on gas-focused exploration is continuing a multi-year downward trend, which WoodMac believes is an insufficient amount of capex in gas required to meet global demand.
“Looking at future uncertainty, fast payback is very desirable,” Clarke said. “Capex is going towards oil, but maybe the longer-term opportunity [is] in gas.”
Recommended Reading
Barnett & Beyond: Marathon, Oxy, Peers Testing Deeper Permian Zones
2024-04-29 - Marathon Oil, Occidental, Continental Resources and others are reaching under the Permian’s popular benches for new drilling locations. Analysts think there are areas of the basin where the Permian’s deeper zones can compete for capital.
ConocoPhillips: Permian Basin a ‘Growth Engine’ for Lower 48
2024-05-15 - ConocoPhillips views the Permian Basin as a “growth engine” within its Lower 48 portfolio, the company’s Midland Basin Vice President Nick McKenna said during Hart Energy’s SUPER DUG event in Fort Worth.
SM Energy Targets Prolific Dean in New Northern Midland Play
2024-05-09 - KeyBanc Capital Markets reports SM Energy’s wells “measure up well to anything being drilled in the Midland Basin by anybody today.”
New Permian Math: Vital Energy and 42 Horseshoe Wells
2024-05-10 - Vital Energy anticipates making 42 double-long, horseshoe-shaped wells where straight lines would have made 84 wells. The estimated savings: $140 million.
Texas Earthquake Could Further Restrict Oil Companies' Saltwater Disposal Options
2024-04-12 - The quake was the largest yet in the Stanton Seismic Response Area in the Permian Basin, where regulators were already monitoring seismic activity linked to disposal of saltwater, a natural byproduct of oil and gas production.