Standing at the center of the prolific Permian Basin, Scott Hodges explains how the future of the world’s largest oil field may very well depend on what he calls jokingly calls the “really smart guys.” Hodges, a 57-year-old manager with Occidental Petroleum Corp., runs a cluster of installations at the Hobbs oil field, where dozens of wells don’t pump a single barrel of oil but instead do the opposite: push stuff — lots of it — into the ground.
Occidental runs the operation in southeast New Mexico as part of its so-called enhanced-oil-recovery program, injecting carbon dioxide and water underground to force out crude that might otherwise languish in the reservoir. EOR already works in conventional oil fields — now the company is trying to make it work commercially in shale rock.
If Occidental and its rivals’ experiments with similar techniques are successful — a big if, in the view of many others — it could further transform the Permian, which is already the world’s largest oil patch. To do that, knowing how the oil, gas, CO2 and water work together thousands of feet below the Earth’s surface is crucial. “The guys who know what’s happening underground is the RSG,” Hodges says in reference to the company’s Reservoir Study Group. “That stands for the really smart guys,” he adds, laughing.
While the U.S. shale revolution has boosted American oil production to a record, it’s also leaving lots of crude in the ground. At best, fracked wells only recover about a 10th of what the industry calls the oil-in-place.
“We are trying to be very conservative, but certainly we believe that we can improve from 10-11 percent to 17-18 percent,” Occidental Chief Executive Officer Vicki Hollub said in an interview in Houston. “It’s a lot. When you consider the scale of the Permian basin, to do that will be amazing.” Hobbs is a conventional Permian field, developed decades before engineers figured out how to drill horizontally and then inject huge amounts of water, sand and chemicals to open up fractures in the rock, freeing hydrocarbons from shale reservoirs.
Across the U.S., there are over 80,000 shale oil and gas wells more than five years old, pumping a trickle of hydrocarbons. They provide a massive opportunity for anyone who can figure out how to extend their life and extract a few extra barrels. Achieving that would be especially welcome in the shale industry, which is currently compelled to invest more each year in new production just to offset the natural decline of its older wells.