Will Saudi Arabia Allow the US Oil Boom?

James Stafford: What's the next Bakken?

Chris Faulkner: That's a tough one. In a sense, we've already seen it with the Three Forks reappraisal. But it would be exceedingly difficult to replicate the Bakken, with its vast areal extent and thick pays. Progress is being made with a modest level of drilling in the Tuscaloosa Marine Shale of southern Louisiana and Smackover Brown Dense Shale in southern Arkansas/northern Louisiana, but results have been somewhat spotty to date. Perhaps the best prospective candidate is the Cline Shale in the Texas Permian Basin. This shale covers a vast area, has very thick pay zones, and there is established infrastructure. Some estimates have put its technically recoverable resources at 30 billion barrels of oil. But it's very early days in that play. Devon Energy is moving aggressively there, and we should get some hints of its true potential before too long.

James Stafford: How excited should investors be about the Monterrey Shale?

Chris Faulkner: Some restraint is in order. While preliminary estimates put potential Monterey Shale technically recoverable resources at more than 15 billion barrels, it's hardly a slam dunk. There has been a flurry of leasing and some drilling to date, but as of yet no operator has “cracked the code” for the Monterey. Even apart from the substantial technical challenges and complicated geology and petrophysics, a bigger hurdle would be the widespread and entrenched anti-oil development attitudes industry faces in California, which already has the most stringent regulatory regime in the nation. Furthermore, that anti-oil stance will just gain momentum with the anti-frac campaign that the environmental pressure groups are pushing now.

James Stafford: The US government's next auction of Gulf of Mexico acreage is expecting a bigger turnout than previous auctions. How is the bidding environment shaping up ahead of this sale?

Chris Faulkner: Excellent. Even with the near tripling of minimum bid requirements in deepwater areas, I expect brisk bidding. Operators are fine-tuning their exploration strategies in the deepwater areas, and some recent significant discoveries, such as ConocoPhillips's huge Shenandoah find, will only stoke that enthusiasm. I think we're also seeing the beginnings of a revival in shallow Gulf waters, judging from the high number of bids there in the last sale. Expectations of a gas price rebound were underpinned by the latest approval of another LNG export terminal—both positive for shallow-water drilling.

James Stafford: How important are Brazil's pre-salt finds to a revival in the US Gulf of Mexico?


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WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Gary P. Olson, MBA, P.E.  |  June 08, 2013
Excellent article, I appreciate the candor therein. I started doing "exotic" fracture stimulations in 1978. Never heard from the EPA. Designed exotic fluids for completions or recompletions. Again, nothing out of the EPA. I did inquire about the "bad" press. The answer was that the "press" just found out about fracture stimulations. The functional illiteracy of the press and the EPA should be a cause for much consternation within the industry.
Jan Arps  |  June 07, 2013
An Excellent and very insightful review of some of the major issues facing the oil and gas industry today. Im saving this for future reference to address concerns raised by oil industry critics.
Floyd  |  June 07, 2013
What can the Saudis do in the end? The need American defense, it is not likely that they are able to muster any influence with regard to our oil production.
Myrtle C  |  June 06, 2013
And no, the US is not vulnerable to Middle Eastern Pricing Rigging, as we all can see Breitling Energy was the commentator and at the rate of exchange, though still remaining one of our Allies and NAFTA, the US has become more independent in Natural Resources and less foreign dependency, Boy, have we grown....Miss America, the Beautiful and God Bless America.

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