The Cline Shale oil play lying at roughly 9,250 feet below the surface along the eastern flank of the Midland Basin could possibly be a key component for energy independence for the U.S. The play area runs roughly 140 miles north-south and about 70 miles wide through Howard, Glasscock, Reagan, and Sterling Counties. Click here for more information on Cline Shale rock properties from a previous blog.
Devon and Chesapeake recently reported impressive test well results. Devon’s wells show the formation contains 3.6 million barrels of recoverable oil per square mile. A rough approximation, taking into account the 9,800 square mile area of the Cline, indicates over 30 billion barrels of recoverable oil. This exceeds both the Bakken and Eagle Ford by far. The USGS estimates the Bakken Shale to hold up to 4.3 billion barrels of recoverable oil, and the Eagle Ford has estimates at as much as 7 to 10 billion barrels of total recoverable reserves. John Richels, president of Devon, gave an expected type curve value of 570 MBOE for a Cline Shale well, with 85% being oil and NGLs.
I have pulled in some Cline Shale producing horizontal wells in the map below with Drillinginfo. Here one can see some of the more oily producers versus the higher gas producing wells.
Laredo Petroleum, still in the early stage of development, has completed 33 gross horizontal Cline Shale wells, more than any other operator exploring the play. Laredo has 142,000 net acres in the central fairway. Apache Corporation has 6 wells planned to be drilled this year, but with roughly 520,000 net acres prospective to the Cline, holds more acreage than any other company. Devon Energy is still in the testing phase of the Cline. However, Devon does hold 389,000 net acres in the Cline, but has only vaguely reported encouraging initial results. Other E&P companies include Exco, Firewheel Energy, Callon Petroleum, Chesapeake, Range Resources, among others.
Here is a look at top operator leasing activity over the past 36 months by record date using Drillinginfo. The play actually extends northeastward a bit more into Mitchell, Borden and Scurry Counties. However, the central portion of the play has seen the most activity to date.
Considering the magnitude of this amount of resource potential one can only expect to see an even bigger issue of housing constraints, as seen in North Dakota and South Texas. From Snyder down to Midland and everywhere in between, I would expect to see a lot of housing infrastructure development. Local communities are worried that the construction will not happen soon enough. Abel Deloera, Snyder councilman and owner of Deloera Realty, said he gets 10 to 15 calls everyday from people searching for housing, sometimes in tears. According to Doloera, Snyder lacks betwen 400 to 500 housing units and there has been a huge increase in land value in the area. It should be very interesting to watch this prolific liquids-rich play unfold. For more information on the Cline Shale and other exploration hotspots, feel free to check out the Emerging Plays Unconventional Reservoir Blogs.
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