USGS finds 20 billion barrels of oil underneath West Texas desert

The Permian Basin, also called the West Texas Basin, has long been considered the most important oil and gas producing area in the US. But even in the midst of troubling issues faced by the oil & gas sector, the Permian Basin still keeps on giving.

The most recent US Geological Survey (USGS) assessment found an estimated 20 billion barrels of oil, 16 trillion cubic feet of associated natural gas, and 1.6 billion barrels of natural gas liquids in the Wolfcamp Shale, located in the Midland Basin portion of the larger Permian Basin. The estimate is for continuous (unconventional) oil, and consists of undiscovered, technically recoverable resources.

Continuous oil accumulation refers to unconventional formations like shale, in which the oil exists throughout the entire formation, rather than collecting in discrete pools, as happens in conventional sand and limestone formations.

On the other hand, “undiscovered, technically recoverable resources” are those that are believed to exist based on current geological knowledge of the formation, and which could be recovered using current technology.

This is the first assessment of continuous resources in the Wolfcamp shale in the Midland Basin portion of the Permian, and it is the single largest estimate of continuous oil that USGS has ever assessed in the US. At current prices, the oil is estimated to be worth almost US$900 billion.

“The fact that this is the largest assessment of continuous 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,” said Walter Guidroz, program coordinator for the USGS Energy Resources Program. “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.”

Although the Permian has been producing crude since the 1920s, its multiple layers of oil-soaked shale remained largely untapped until the last several years, when intensive drilling and fracturing techniques perfected in other US Shale regions were adopted.

The Wolfcamp, which is as much as a mile (1.6 km) thick in some places, has been one of the primary targets of shale drillers.

Adding to that, the deposits in the Permian Basin in the West Texas and Mexico regions are so rich that oil explorers who have operations in the area still generate profits despite the two and a half year slump in crude oil prices.

A race to grab assets in the Permian has been the main driver of a surge of deals in the energy patch and the industry’s main source of good news.