American Oil and Gas Reporter - June 2016 - 45

SpecialReport: Permian Basin Update
timate recovery," Hall concludes. "Our focus is on a full-cycle development plan because we are in for the long haul."
With more than 20,000 potential
drilling locations, Hall says Pioneer is focused on putting the pieces of the puzzle
together.
Horizontal Advantages
Encana Corporation, which entered the
Permian Basin only 18 months ago, has
146,000 acres in the heart of the Midland
Basin, which includes Howard, Glasscock,
Midland, Martin and Upton counties.
Jeff Balmer, Encana's vice president of
Permian operations, says his company has
1,350 operating wells, including more than
1,100 vertical wells it inherited when it acquired its leasehold. He says the theory for
drilling vertical wells is to drill as deep as
possible and then commingle all the
zones the wellbore encounters. It was that
technique-often called the Wolfberry (a
combination of the Spraberry and Wolfcamp)-that led to the resurgence of the
Permian Basin in the last decade.
Contrary to what may seem logical in
today's economic climate, however,
Balmer says Encana is reducing the number of vertical wells it plans to drill.
"We have cut a number of vertical wells
by reworking our leases," he explains. "We
have very smart, savvy landowners in the
Permian Basin. Our vertical wells cost $2.0
million and make 100-150 barrels a day.
Our original target cost for drilling and
completing horizontal wells is $5.7 million, although we have crushed that this
year. The horizontal wells peak at 6001,000 bbl/d, so it is easy math to see how
horizontal wells are more profitable."
Balmer says Encana started last year
with a plan to drill 75 vertical wells. It reduced that to fewer than 20. At $2 million
per vertical well, he claims the company
saved more than $100 million from its capital budget simply by reworking leases
with landowners.
Balmer says Encana expects to drill 4550 horizontal and 25-30 vertical Permian
Basin wells this year with a capital budget of $500 million.
Although much of Encana's activity in
the past year has been on the Guitar lease
in Howard County, Tx., Balmer says its
2016 focus is shifting to the next two counties to the west-Martin and Midland-where
he says the company's acreage has good
reservoirs and stacked potential, producing "outstanding, repeatable results."
He says Encana is drilling laterals in the

Wolfcamp A, B and C benches, as well as
in the Lower Spraberry on its Midland
Basin acreage.
The Right Plan
Encana ran a two-rig program in the
first quarter, drilling 20 wells. Balmer says
the company has completed everything it
has drilled so far. He boasts that Encana's
executive management has trusted his
teams to be profitable while allowing
them to experiment with different completion techniques. He notes his teams bring
a variety of hybrid experience to the Permian Basin from working in other plays
across the country such as the Piceance and
Denver-Julesburg basins, and the Eagle
Ford and Haynesville shales.
"We try to learn something from every
well we drill," he emphasizes. "We are trying to determine what the best horizontal
and vertical spacing is for the overall development plan. We also are trying to determine how many wells to include in each
stratigraphic sequence. We will drill a
bunch of wells off a single pad, which is
a real benefit and savings."
Earlier this year, Encana drilled 14
wells on the RAB Davidson 27 pad in
Midland County, utilizing four rigs drilling
simultaneously. Balmer calls it "one of the
coolest things I have seen."
Encana is employing zipper fracs, stimulating the first stage of the initial well and
then fracturing the similar stage in its sister well, alternating between the two wells.
"That creates fracture complexity,"
Balmer attests. "The fractures are meeting

with some resistance, which causes more
rock to break and creates more stimulated value."
Balmer says Encana shoots for 7,500foot laterals, although it averaged 8,600 feet
on its 14-well development in Midland
County. The company's Wolfcamp/Spraberry wells produce 80-85 percent liquids, with
the vast majority being crude oil.
Balmer lists reservoir quality as a primary reason for the success of Encana's
Midland Basin wells. "There is a good
pressure system," he states. "There is
more pressure as you move west. There is
a high-quality, thick oil column with the
right amount of gas."
Balmer says he understands why the
Permian continues to be the leading oilproducing basin in North America. "It still
is the most profitable," he maintains. "It
is a world-class basin. It is very successful because of the people in Midland. You
don't have to bring in expertise from somewhere else; it is there already. And Midland has high-quality, competitive service
companies available."
Delaware Basin
Another Permian sub-basin, the
Delaware, which covers far West Texas and
the southeastern edge of New Mexico, is
producing some of the region's best wells.
Chad McAllaster, vice president of
Delaware Basin operations for Anadarko Petroleum Corp., says the company has
255,000 net acres in the heart of the
Delaware Basin, all on the Texas side in Loving, Reeves, Ward and Winkler counties.

Encana Corporation anticipates drilling 45-50 horizontal and 25-30 vertical Permian Basin
wells this year with a capital budget of $500 million. The company, which has been active
in the basin for only a year and a half, has 146,000 acres in the heart of the Midland Basin.

JUNE 2016 45

American Oil and Gas Reporter - June 2016

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