The story’s been told numerous times, and in various ways, but if there is a good “short version” of the tale, it’s in this capsule remark from Henry’s friend Jim White:

“He [Jim Henry] was the first one to develop the Wolfberry [formation]—it will make Midland a production center for many years to come,” said White, who is owner of JMW Petroleum and has known Jim Henry for more than 40 years. “He discovered it as a potential producer—it’s much like some of the shale formations you’ve heard about—it had been drilled through for several years and just had not been recognized as a potential economic performer. It’s not that he discovered a new reservoir. He discovered the potential of a reservoir.”

Henry himself, who is known for his generosity, would not go so far to claim the discovery for himself personally, preferring instead to spread credit around to his employees, past and present. But the fact is that Henry’s company was indeed the discoverer that White describes.

“It’s just been a boon to the West Texas economy and particularly the area around Midland,” White added. “You can see drilling rigs all around here that are the result of that economic discovery.”

The story of how that monumental play unfolded is rich in twists and revelations and even a sort of hide-and-seek game played out right in the very midst of the most carefully studied and heavily worked oil field in the country.

And even before that story began, there was an ironic twist that, in retrospect, seems almost to presage the plotline that would follow.

It was sometime back in the 1990s that a lease drilled by Arco—marking the last batch of some 300 wells drilled altogether by Arco in the Wolfcamp play, in the Midland Basin—would hold a clue to what might lie underneath. What’s ironic is that this lease—named Boltinghouse—came so late in Arco’s program, and yet was the first to show a significant uptick in potential. And yet when this lease showed promise finished, British Petroleum acquired Arco. And BP pulled out of the Wolfcamp for good. That Boltinghouse lease would catch the eye of Henry and his associates not long afterward.

In his own telling of the account, Henry starts somewhat earlier.

Back in 1969, Henry got into business for himself with Bob Landenberger, a geologist, and the two of them “started specializing in the Spraberry,” as Henry puts it, referring to another of the Midland Basin’s well known oil plays. In 1977 Henry would buy out his partner and form what would be known as Henry Petroleum. But under whatever company name, Henry and his associates “have been drilling in the Spraberry for over 40 years.”

And when a small independent specializes in one area, that company gets to know that area very well, Henry said.

Such a company “is in an enviable position to take and develop any rapidly growing trends—like the Wolfberry,” he said. “Because we understand what is going on. We understand the Basin. We understand particularly the Spraberry, and when we added the Wolfcamp to it, it became an economical sensation.”

That practice of working multiple formations became a Henry trademark, thought Henry credits Arco as being the pioneer in that field. Regardless, working multiple formations is now a standard for local producers.

So Henry and his team were already active in the Midland Basin when Arco was drilling its 300 wells.

“Arco in the 1990s had a farmout from Texaco and they drilled their [300] Wolfberry wells,” Henry said. “They started out just drilling Spraberry wells and they just started adding the Upper Wolfcamp and then they added the Middle Wolfcamp. They never added the Lower Wolfcamp. We added the Lower Wolfcamp. But they started fracking the wells. They developed frac techniques—huge frac techniques, ten times what the original frac techniques were.”

But Arco’s wells were only “marginally” economical. Except for the Boltinghouse lease. And when British Petroleum bought Arco out, BP did not continue drilling.

“We eventually started [there],” Henry said. “CMS, a Michigan utility, was operating here and Danny Campbell was head of CMS’s Midland office. He took the farmout from Arco. Well, he needed some help, because he didn’t have enough financing from CMS.”

That’s where Henry Petroleum stepped in. CMS farmed out 14 locations to Henry Petroleum.

“We had a three-fourths partner, and we had one-fourth,” said Henry. The partner was Pure Resources. Pure was bought out by Chevron. “And so we got to where we were working with Chevron.”

He grinned. “And we made Chevron several billion dollars.”

First, though, they had to simply make some kind of modest success in their new venture. The Boltinghouse lease would become a prototype for what Henry Petroleum would do.

They drilled the 14 locations, and the wells there were only “fair.” Henry’s geologists and engineers were charged with seeing what they could do to make it better. Part of their solution was to drill down through the Wolfcamp—all the way through the Wolfcamp, through even the lower Wolfcamp. Then the company hired Dennis Phelps to help them with their frac technique. It was Phelps who had helped Arco refine its own frac technique during their 300-well program. More of that Boltinghouse influence.

A Move to the Fringe

But perhaps a bigger step came when the company decided to move their efforts a little more to the fringe of the formation. Until that time, the drilling was concentrated in the middle of the Midland Basin—what would have been roughly the center of the floor of what had once been the Permian Sea. There, the oil-bearing rock was mostly shales or mudstones, possessing little permeability. The geologists reasoned that if they went to the regions away from the sedimentary-type center, they’d find oil-bearing formations with more gravelly or rocky components. Detritus, it is called, and it can be compared to the rubble-filled talus slopes that lie at the foot of canyon walls.

Henry pointed to a map—the same one reproduced here—and noted the positions of the Central Basin Platform and the Midland Basin. As the debris “falls off” the platform, the larger chunks lie nearest the fringe and the smaller ones distribute more toward the middle of the Basin. So “the facies change as you get down toward the middle, until you get down to shales and mudstones that don’t produce very good at all,” Henry said.

So they moved their operations from Midland County to Upton County, to what would be called the Sweetie Peck field, on that “fringe” of the Midland Basin. This was in 2003. They drilled a well called Caitlin 2801, “which is what you might call the discovery well of the Wolfberry field,” and they employed their new and refined frac techniques.

That well came in “very good,” producing about 150 barrels per day.

“So we said, ‘Well, this is a seems to be a good concept. Let’s step out a ways and see if it still works. So we went south about 20 miles.”

They drilled a well in what would be known as their Chickadee Field. And they learned that the Wolfberry formation in that region is a thicker payzone. Some 800 feet, as compared to the Sweetie Peck’s 400 feet of formation.

The Chickadee well came in strong, flowing more than 100 barrels a day.

“So we knew we had a significant discovery if we have two very economical wells 20 miles apart,” Henry said. “That meant it probably covered the whole area out there. So we started the program—that’s the Wolfberry program—and that’s when we made the deal with Pure where they owned ¾ of the acreage and we owned ¼. We kept on drilling like that. And the wells kept on coming in good. So we went out and made a serious effort at leasing up everything we could find in what appeared to be this trend.”

The Wolfberry name is a hybrid term that was coined by Henry Petroleum engineering manager Van Temple, who combined the names Wolfcamp and Spraberry.

The “Other Story”

“Now, there is an other story in this,” Henry said. And he commenced to tell about how Henry Resources kept their find under wraps.

“In 2003 we were drilling these new Wolfberry wells. And people couldn’t figure out what we were doing. We had been a Spraberry driller for 40 years. And we’d drill these [new] wells and they’d be put in Spraberry fields, because it is legal to commingle Spraberry and Wolfcamp. Initially, the wells would come in good. But we fracked them with [sufficient] water that you were producing a lot of water when you came back.”

Henry and team were orchestrating matters in such a way that the well results would initially look relatively unremarkable to anyone looking over their shoulders at how much oil their wells were flowing.

By putting more water in the ground, the initial production, which would include much of that water, would be greatly diluted. This meant that the oil production would seem modest.

They found they could take a well that ought to have a flow of 140 barrels of oil and make it look as though it produced only 40 barrels at its outset. Putting enough water in the formation would do that.

“So that kind of camouflaged things,” he said.

Unfortunately, the water content would taper off and the oil percentage would keep increasing until the true oil output was discernible some months after the well was completed.

But that’s where another phenomenon helped out.

Henry shared a graph that showed a well starting with 60 barrels of oil per day quickly spiking, some three months along, at 130 barrels of oil per day. But the graph also showed the flow then going into swift decline.

“Look how fast it dropped off,” he said. [See accompanying chart.] “People would see how, after a year or so of us producing, it had come down so much. And they’d say, ‘That’s not economical.’

What these observers did not realize is that the decline flattened out and ran relatively steady from a certain point onward. The curve acquired the proverbial “long tail.”

“So that was the second thing that camouflaged it. They didn’t think we were doing any good. It was up to 130 barrels per day in the third month, and then it drops off fast. So it looked just like a flash in the pan. Which the Wolfcamp had been for the last 50 years.”

And why didn’t people see that the dropoff flattened out?

Henry points to the graph again. “That’s out here about two or three years.” The observers weren’t watching that long.

Why did the production level out 2-3 years into its lifespan?

“That’s just the nature of the Wolfberry—particularly the nature of the Spraberry,” says the guy with 40 years’ experience in the Spraberry. (And these being multiple plays, one play’s characteristics can camouflage another’s, apparently.)

Altogether, in its wild ride in the 2003-2008 era, Henry Petroleum leased up 330,000 acres. By 2005, other operators were finally catching on.

By this point, the most colorful era in Henry Petroleum’s history was nearing its end, though the company’s breakthroughs would continue—do continue—to transform the region. But the competition was coming, and the bidding for leases would drive prices higher and higher. The best days would be behind.

Henry Petroleum sold out to Concho Resources in 2008, transferring over to them their 330,000 acres that included some 1,000 well completions.

Now called Henry Resources, the company is still drilling. They went from 40 employees and three rigs before the Wolfberry discovery to more than 100 employees and ten rigs at the time of the sale, to about 40 employees and three rigs at present.

“We’re still drilling wells,” Henry said. “ We’ve gone further north and we’re right next to Midland now, where we’re drilling our wells. We have about 100 more locations to drill.”

The Big Picture

“What’s interesting is that of the 330,000 acres, only about 110,000 acres were economical [at the time of the sale]. Some 220,000 were ‘not economical.’ But part of that acreage was over in Glasscock County, in the eastern part of the Midland Basin, and since we sold out to Concho the people over there on the eastern part have figured out how to make it economical. They have added a lot more formations and it is going great guns over there.

“That’s what happens lots of times, when you start in on a play like this: you figure out how to do better,” he added. “We figured out how to do better at the start of the Wolfberry, but then we didn’t figure out the Glasscock County stuff. The people who came in after us figured out .

Referring to yet more maps [not shown], Henry pointed out that, in 1997, 316 Wolfcamp producers had been drilled. Between 1997 and 2002, 554 Wolfberry wells were drilled. But between 2003 and 2011, 3,000 Wolfberry wells were drilled.

He points to some areas nearby that await production, and he says, “If it all is drilled up in here and if you include some of the Glasscock County production, you come with a total ultimate recovery of over three billion barrels of oil.

“Three billion barrels. Which, according to the Bureau of Economic Geology, is the largest discovery in the Permian Basin in the last 50 years.”

Recently, news accounts reported a find in the North Sea that is expected to produce about a billion barrels of oil. This discovery is touted as “one of the largest fields ever discovered.”

But that field (near Norway) is only a third as big as the Wolfberry.

“And ours is here in the United States and it is in a field that has been drilled around and through for 70, 80 years,” he said.

He faced a similar situation while in Libya. The head of engineering for the Libyan company Richards was working with attended the University of Texas in Austin 20 years ago. Other engineers on the project team had spent time in the Basin.

Midland, Odessa and the Permian Basin. They may not be exotic locales featured in travel catalogs, but this area is becoming the “Destination Education” center for petroleum industry personnel throughout the United States and the world.  On any given week, hotels and motels in Midland and Odessa are filled with employees sent by their companies to learn the latest technology dreamed up, researched, implemented and refined in one of the world’s most advanced oilfields. They come for the internationally renown CO2 School or various other seminars offered by area educational entities.

When most of the major oil companies had offices in Midland, the Permian Basin was the first stop for new hires. As a young employee with ARCO Oil & Gas, W. Hoxie Smith was sent to Midland to learn the basics. “All the majors would send their new hires here,” he recalled. “This is the lab for the oil and gas industry.”

More than 40 years ago, geologist Jack Elam observed a need for a place to provide continuing education for industry employees who needed to maintain their certification. He founded the Graduate Center in downtown Midland and it became a center for anyone in the industry needing continuing education, according to Smith who now serves as its director.

In July 2004, the Center merged with Midland College and the name was changed to Petroleum Professional Development Center (PPDC), he said.

“There were so many geoscientists here that Jack wanted to give them an opportunity for continuing education so they could keep up with changes in the industry,” Smith said. “This center was designed for the regional Permian Basin oil and gas industry.” Today, it offers classes almost every week that attract not only people from out of state but also the international arena. Students have placed pins on a world map in the building’s hallway to show their native country.

“Those pins represent students from Vietnam, Australia, New Zealand, China, Peru, Ecuador, Argentina, Venezuela, Africa, Russia, Great Britain and Canada. Basically, it’s every continent except the Antarctica,” Smith said.

A dozen years ago, Jim Henry envisioned a similar project, this one aimed at educating people from other countries. As the president of then-Henry Petroleum, he had traveled to Midland’s sister city, Dongying, China several times.

“It struck me that those people in China have university and graduate degrees in petroleum engineering, but they don’t have any practical experience. The Permian Basin has almost 90 years of production and we have the largest conglomeration of wells in the world,” said Henry, president of Henry Resources. “We have thousands of wells and we’ve tried so many different techniques out here: fracking, water flooding, CO₂ injection.” And the latest discovery involves pulling oil out of Residual Oil Zones.

“I came up with the idea of starting a technology transfer of these things we have to the world. It would be a means of exporting knowledge,” he said. The organization was dubbed Applied Petroleum Technology Academy (APTA) and its goals have evolved over the years. Its mission today is “to provide practical training of oilfield practices in a mature oilfield enviroment emphasizing cost savings with ample opportunity for field visitation.”

Henry recalled the first group of Chinese sent here was not focused on learning petroleum technology but in improving their English.

By 2002, the non-profit had found its niche: Schools on CO₂ injection. “There are 60 CO2 projects in the Basin while there’s not even 60 in the rest of the world,” Henry said. “The CO2 School has really taken off. People come from all over the world for it.”

That school involves the collaborative efforts of APTA and Bob Kiker, Dr. Bob Trentham with the Center for Energy and Economic Development, and Steve Melzer with Melzer Consulting, and often is located at the PPDC. The four-day event is held twice a year and includes field trips to CO₂ sites.

“With the expansion of CO_2, a lot of companies have been sending their people to these schools. The students range from older hands to younger people,” Trentham said. And they run the gamut from reservoir engineers to production people to geologists.

“In the Permian Basin, we move 3 billion cubic feet of CO₂ a day,” said the CEED director. “We do it safely, efficiently and cost effectively. Companies using CO₂ and Enhanced Oil Recovery get a return on their investment. They’re in the business of making money. People outside the Basin are amazed when they hear this. They think we’re just doing some research project. Instead, we’re many steps ahead of doing the research. They look around wide-eyed at what we’re doing. They’re amazed at the infrastructure we’ve built to handle the CO₂.”

Melzer, undoubtedly the expert on CO₂ and EOR and one of the lead speakers at the CO₂ School, said the group conducts the school at other times when requested by special groups. “We did a school for some Japanese and one for Europeans. We took it to Denmark. Next month (May) a group of Europeans are coming here to see what is being done in the field. They’ve never gotten their boots dirty,” he said with a laugh.

The four-day school encompasses a field trip to a CO₂ site, which has included wells in Goldsmith and Seminole. “The field trip is amazingly popular,” Melzer said. “We have to limit the number of people at a school because otherwise we get too big of a crowd for the field trip. CO₂ flooding is a worldwide phenomenon and we could do one of these schools every week.”

As it is, Melzer is consulting with people in the U.S. and overseas almost daily. One recent week, he had just talked to someone in Kuwait and was planning to meet another international client that weekend. This fall, he will meet in Lubbock with a group from the Society of Environmental Journalists.  “They want to see an oilfield and how CO₂ works,” he said.

Melzer explained how the Permian reached this point of expertise in CO₂ Enhanced Oil Recovery. Some companies began using the process in the 1970s but the price of oil dropped. “The inertia to do CO₂ and EOR lost momentum,” said Melzer, who holds a bachelor of science degree in geological engineering from Texas A&M University and a master’s degree in engineering from Purdue University. “But we didn’t lose the ability to do it. Major oil companies continued to use it.”

When the price of oil began to rise in recent years, the use of CO₂ became more attractive for pulling out more oil. And it’s being used for a new process involving an area called Residual Oil Zones, or ROZ, noted Melzer. “We’re getting calls every day about this. There are 11 ROZ projects and this is the only place in the world where it could be done right now.”

Trentham and Melzer explained the history of ROZ beginning with how deposits were buried in the deep Permian Basin and were turned into oil from the earth’s heat. This oil migrated into a trap of an unbelieveable size. Mother Nature waterflooded it and pushed out some of the oil. Today, drilling gets part of that available oil. Oil can still be found in pockets called Residual Oil Zones and drilling into rock won’t loosen it. But CO₂ can move it. The Permian Basin is one of the few places in the world where these ROZs are found.

“To date, all the ROZ and CO₂ Enhanced Oil Recovery projects are in the Permian Basin,” Trentham said. “These are producing 11,000 barrels of oil per day. We’re hoping to expand it as more CO₂ becomes available.”

Projects planned that will produce CO₂ as a by-product to be made available for the oilfield include the Tenaska Power Plant near Sweetwater and the Summit Power’s Coal Gasification Plant planned near Penwell that will sequester carbon dioxide for use in enhanced oil recovery.

This concept of capturing CO₂ and injecting it underground for use as enhanced oil recovery intrigues environmentalists. Melzer said a group of environmentalists is “wanting us to take the class to China. The Chinese basins are a good example of several stages of tectonics. They could build a gasifier plant like Summit’s project and get it approved and started in a matter of weeks. We take years here. They can accelerate the technology development over there. They want to get into our minds and we want to get into their data. Their only education is a textbook and our technology is not in a textbook.”

Trentham said they also have talked with companies in the Middle East that are looking forward to incorporating this process of using CO₂ in the Residual Oil Zones. “Europe has shown some interest, but they’re far behind us.”

Other than the school, Melzer and others have conducted an annual CO₂ conference that is held in Midland. “We get 350 people. We don’t advertise it; it gets around by word of mouth. Last time we filled up the Midland hotels and some people had to stay in Odessa.” Like many others, this event is a collaborative effort with CEED, Melzer, APTA and the Petroleum Professional Development Center.

Funding for some of these conferences and schools have come from the Department of Energy, such as the Research Partnership to Secure Energy for America, according to Trentham.

At the Petroleum Professional Development Center, Hoxie Smith focuses each year on attracting the best teachers in the country for a wide variety of  seminars.

PPDC offices in downtown Midland also house a meeting room that can hold up to 40 persons. If more than 40 sign up, the session is moved to the Advanced Technology Center on Cuthbert Avenue. By the end of this year, Smith expects to have watched 3,000 persons walk through the doors of the building. In addition, the center hosts symposiums on topics such as the shale plays, water use management or environmental issues at Midland College.

“A lot of people want to come to the Basin and have an opportunity to be in front of good instructors. We always try to get the best of the best in teachers, and we offer quality courses at reasonable prices,” the director said.

In mid-April, Dr. William Cobb taught a five-day course on waterflooding. With 35 years experience in the industry, he specializes in pressure transient analysis and property management. He has hands-on experience in waterfloods in North America, Australia, Africa, the Middle East, North Sea, South America and Southeast Asia. “He is the best expert in the world on this topic,” Smith said.

Dr. Michael Economides, professor of chemical and biomolecular engineering at the University of Houston and an author of books on energy, is scheduled to teach a course on hydraulic fracturing July 9-13. This class will be advertised nationally, according to Smith.

Another popular instructor is Jennifer Miskimins, Ph.D., associate professor at the Colorado School of Mines. She taught a course in April on Completions and Stimulations for Geologists.

Classes appeal to geoscientists, geologists, petroleum engineers, oil and gas accountants, landmen, geophysicists, and division order analysts, just to name a few. “We provide a way for people who need ongoing continuing education to keep their certification, Smith said.

“We do have a worldwide reputation,” he added.

The Permian Basin: It’s Destination Education for much of the petroleum world.

The all-day sessions, which included a number of speakers as well as two panel discussions by industry experts, convened April 3 at the Midland Center.

Billed as “an annual conference for those who buy, sell and manage oil and gas assets,” the event surpassed its billing, delivering some of the most penetrating analysis available on a marketplace that is in swift transition.

Speakers included Susan Ginsberg, vice president of crude oil and natural gas regulatory affairs for the Independent Petroleum Association of America (IPAA); U.S. Representative Joe Barton; Jerry Schuyler, president and COO of Laredo Petroleum, Inc.; Scott Sheffield, Chairman and CEO, Pioneer Natural Resources Company; and Ward Polzin, CFA, Managing Director of Investment Bank and Head of A&D, Tudor, Pickering, Holt and Co.

Ginsberg addressed her remarks to legislative and regulatory matters. Striking the position that President Obama, to insulate himself from high gasoline prices and his own failing energy policy, Obama is hammering on the oil and natural gas industry, Ginsberg remarked: “We can place our bets on the fuel of the past, or we can place our bets on American know-how and American ingenuity and American workers. . . that’s the choice we face.”

The speaker observed that the “reality,” under Obama, is that oil and natural gas production on federal lands is down 40 percent, while federal agencies have increased delays and restrictions to onshore and offshore federal lands. But the “rhetoric” from the White House has been that President Obama claims credit for increases in oil and natural gas production.

Ginsberg spoke of the pressures from Washington on the oil and gas industry, ranging from the discussion of ending oil and gas subsidies—discussion that is voiced regularly on major news outlets—to regulatory overreach by Washington that threatens to cripple the growth of the industry. As for the subsidy talk, Ginsberg said there weren’t actually subsidies that exist for the oil and gas industries that are structured like the subsidies for the farming and green energy industries. What is in place and what the administration wants to remove are allowable write offs for intangible drilling costs and other production costs. She said the removal of these write offs could affect up to 20 percent of a small producer’s profits that are reinvested in more exploration.

And as for the regulatory overreach by Washington, Ginsberg cited the Endangered species act, the financial reform legislation, and how the latter affects small oil and gas producers.

Lastly she touched on jobs, and praised the oil and gas industry for its contributions in this vein.

Barton delivered what was deemed “An Insider’s View from the Oldest Legislative House Committee (Energy and Commerce).” The event’s program stated that “as the House’s leading expert on energy policy, Barton has led the House charge to pass comprehensive national energy policy legislation.” The congressman shared his insights on the development of policies that affect the industry.

Another morning session was given over to “Stories of successful strategies and structures from those in the trenches,” featuring Joe Wright (senior vice president and chief operating officer at Concho Resources), Ron Gasser (engineering manager at Clayton Williams Energy), and Pete Hagist (vice president of operations at Whiting Petroleum Corporation).

Then Schuyler spoke on “The Importance of Permian Oil Production Nationally.” (See accompanying chart [Impact of Permian Production On Imports By 2015] for some of his salient points.)

Asking the question, “Is U.S. Energy Independence Achievable by 2020?” Schuyler averred that, hypothetically, yes, it is. Some contributing factors in that vision could include the following: the Permian Basin itself, the Bakken and Eagle Ford shale plays as well as other shale plays, the GOM Deepwater project, Canadian production, diesel fleet conversion to compressed natural gas, and natural gas vehicles themselves as a potential added factor.

As the afternoon began, Sheffield spoke on “Pioneering the Permian.” (See accompanying charts [Permian Rig Count Increased 5 Times Since 2009] and [Numbers of Rigs in Permian Basin up 5 Times Since 2009] for some of his salient points). See also our “Rent or Buy” article in this issue for some of Sheffield’s remarks from this event.

Polzin, representing the investments world, tackled the topic of “Permian Deal Market:  Right Place, Right Time.”

Why is the Permian Deal Market the right place at the right time? As Polzin noted, ten-year oil production is up 153 percent. Oil prices will remain strong, liquids pricing is “strong enough,” and oil deals are increasing. Moreover, horizontal applications, vertical applications (accessing new pay zones), and multiple targets are all contributing to the promising future.

A morning panel discussion included Matthew Thompson, Ron Gasser, Pete Hagist, and Joe Wright, while the afternoon version, which was handled by Kyle Bass, Wil Van Loh, and moderator Steve Toon, assessed today’s investment environment.

The preceding day, April 2, was given over to a golf scrambled played at Green Tree.

Don’t think I have mentioned my grandfather Jack Robison. We have a photograph in our ExL conference room of him standing on a rig floor in 1935 wearing a straw hat (before the days of OSHA), with a chaw of tobacco set squarely in his jaw and a drill bit cradled in his arms. Grandad Jack was farming in Mitchell County and got tired of looking at the rear end of a mule. He noticed some oil crews working in the area and decided that he would try that for a while. He spent the next 40 years as a tool pusher working rigs all over West Texas. As a result of that job my father Frosty Robison was the first in his family who was able to go to college. He ended up with a 39-year career with the Cosden/Fina refinery in Big Spring. Each generation of our family has had ever-increasing opportunities thanks in no small part to Grandad Jack being able to get that first job working rigs almost 80 years ago.

Our industry is making available the same types of careers and opportunities today. Men and women, many of whom have not had the opportunity for advanced education, have well paying jobs with quality companies that offer the type of career that can make the difference for them and generations of their heirs. The Permian Basin is a career market that is literally a pathway to the middle class and is doing so in a national economic environment where similar opportunities are hard to come by. The privilege of giving people these types of opportunities is what motivates me and many others to do whatever we can to prevent misguided or ill-intentioned regulatory policies from crushing the job climate we have in West Texas. One of the greatest privileges we have is the ability to give someone a job that gives them opportunities far beyond what they would have otherwise experienced. I know our industry does not buy into the sentiment that is expressed in so many other parts of the country that our country’s best days are behind us and that future generations will not be able to enjoy the quality of lifestyle as prior generations did. There are good days ahead.

Ben Shepperd

The deadline for the U.S. Fish and Wildlife to determine whether or not to list the Dunes Sagebrush Lizard as Endangered is fast approaching.  It is likely that they will make an announcement prior to the June deadline.  If USFW lists the Lizard, the Permian Basin will be changed forever.  We continue to advocate for the lack of scientific justification for a listing and are holding out hope.

Last month, United States Speaker of the House John Boehner visited Midland.  (For images of that visit , see the photo spread on pages xxxx-xxxx). The visit was arranged by Midland Congressman Mike Conaway. Several PBPA members, including Mark Philpy of Northstar Operating, joined me in providing a Permian Basin oil and gas overview to the Speaker.  It was a fantastic opportunity to be able to present our issues directly to the second most powerful person in the U.S. Government.  We covered a whole range of important issues, including Intangible Drilling Costs and Percentage Depletion and had quite a lively discussion.

Later that afternoon, we toured a drilling operation courtesy of Norbert Dickman of Fasken Oil and Ranch.  We then toured a frac job and our tour guide for that was Clint Walker of Cudd Energy Services.  It was a great occasion to demonstrate how a frac job is done and all of the safety precautions that are taken to protect groundwater, not to mention how many employees it takes for one of these projects.  The Speaker clearly seemed to enjoy seeing first-hand how these hard working folks produce our energy.

On April 30, the Texas Senate held a meeting in Odessa to discuss the Dunes Sagebrush Lizard.  Lieutenant Governor Dewhurst added an Interim Charge to the list of Natural Resource Committee charges to analyze the economic impacts of the proposed DSL listing.  Natural Resources chairman Troy Fraser (R-Horseshoe Bay) tapped Senator Kel Seliger (R-Amarillo) to chair this effort.  Senators Robert Duncan (R-Lubbock) and Carlos Uresti (D-San Antonio) round out the subcommittee.

At the time of this writing, I can’t report on what was discussed at the meeting but it is likely to result in some legislative proposals.  I will report next month what transpired.

Many thanks to all who attended and help support our golf tournament this year.  We appreciate your support.

It might be the “cruelest month,” but the 2012 edition of April seems to be traipsing in pleasingly enough, and boding favorable weather for folks fortunate enough to be employed in oil and gas.

April is a time for thunderboomers and all kinds of upstart weather and other seasonal/cyclical changes. April is also the national month for a lot of causes. It is national volunteer month, national stress month (does that catch anyone? We’re betting so), national food month (ditto), occupational therapy month, kite month (flying one would ease some of that stress), humor month, and more. We think there needs to be a national “appreciate our oil and gas industry month,” but meanwhile, we’re glad it’s spring and business is booming. Some stress-free subject matter here to go with the season.

A Texas Oil Classic

It’s been called Texas’ own Gone With the Wind, but by whatever name, the motion picture Giant (that’s a pretty good name, at that), tells the story of an oil boom and does it with style. James Dean immortalized the character of Jett Rink, a role that was said to be based on the life of Texas wildcatter and oil tycoon Glenn Herbert McCarthy (1907-1988).

Open Mouth, Insert Food

By Bobbie Cupell, General Mgr., Burmass Oil Directory

Harvest Café

There are some foods you get uncontrollable cravings for. You know what I mean. That “I’ve got to have it, and have it now” feeling that you just can’t deny. One of my major crave foods is the often imitated, but never duplicated, tomato basil soup at Harvest Café. This creamy red bisque is a perfect palate pleaser topped with fresh chopped basil and big chunks of bread. It’s warm and fragrant and hits all the right taste buds. I love watching the diners around our table taste it and make that “Yum” face. It’s got to be a great feeling to make something that makes so many so happy.

Of course you can’t have soup alone, so pair it with a delicious sandwich. My favorite is the BLT. It’s a perfect mix of a generous portion of crunchy bacon, juicy ripe tomatoes, crisp romaine lettuce, perfectly toasted wheat bread and just the right smidgen of mayonnaise. Yum.

And for dessert, Harvest Café sets out an entire case of tempting delights. However, we’re all hooked on the lemon bars. These are huge, a full 9 square inches, so they’re perfect for sharing. Our waiter even divided our shared bar up for us. The bottom crust is a buttery, crumbly delight topped with a mouth-watering layer of the most lemony lemon topping and dusted with a generous helping of powdered sugar. The combination is a one-two punch to your taste buds that is a perfect finish to a fantastic meal.

Harvest Café has a fantastic relaxed atmosphere that’s great for getting away from the office and is an impressive, arty style café perfect for putting out of town guests at ease.

Next month I’ll have a fresh review for the tasting. Till then, open mouth, insert food.

Word of the Month:

Boom

Boom: n., a deep resonant sound; a long pole extending upward at an angle from the mast of a derrick to support or guide objects being lifted or suspended; a floating barrier serving to contain an oil spill; a period of rapid economic growth, prosperity, high wages and prices, and relatively full employment. v., To grow, develop, or progress rapidly; flourish: Business is booming. Used in a sentence: “In a boom, envy; in a bust, anger.” —Dominic Lawson

They Said It:

“We usually find gas in new places with old ideas. Sometimes, also, we find gas in an old place with a new idea, but we seldom find much gas in an old place with an old idea. Several times in the past we have thought that we were running out of gas, whereas actually we were only running out of ideas.” —Adapted from Parke A. Dickey by the American Potential Gas Committee

“We need to face it—as a nation we have a reliance on petroleum.” —Lisa Murkowski

“We need to change our national policies. We need to make domestic production a priority. This is for the people of America—that’s who it is a priority for. This is about us. It is about how we are going to live over the next many decades.” —Mark Mathis, filmmaker/producer of spoiled

And, finally, some poetry in a “boom time” vein, to get poetry month off right: “In good times and bad times / I’ll be on your side for ever more / That’s what friends are for.”

The Burmass Exposition is in the books, and booking business for an even-bigger 2013.

For a fast-moving day-and-a-half, the 2^nd Annual Burmass Tools of the Trade Exposition turned Midland’s Horseshoe Arena into a one-stop shopping and networking experience for anyone needing oilfield goods, services, or business support.

Some 50 exhibitors—marking a hefty increase in booths over the 2011 numbers—gathered March 6 and 7 to show their wares and generate new leads.

The staffs of the Burmass Directory and of this magazine wish to thank all the patrons and exhibitors and enthusiastically welcome you to return for the next installment. (Dates to be announced)

Roby, Texas—Someone give this thing a name. What “thing”? Well, the “thing” is whatever is going on in Fisher County. And, apparently, Mitchell County, Scurry County, maybe Nolan County—places where the words “shale play” are not part of the local vernacular.

And why has this unfolded so quietly? Normally, news reaches media outlets—and this PBPA membership magazine counts as a media outlet—by conventional channels such as news releases, press conferences, official pronouncements, and the like.

This one has been surreptitious. And sources have been tight-lipped, but maybe that is to be expected where new energy finds are concerned.

Word first reached us from someone who works in this office, saying simply that he’d heard there is a lot of leasing activity in Fisher County, which has not been an area that has been associated with the oil or gas plays of recent times. The leases had climbed into the $300 range, maybe higher, per acre.

Our first calls to that area did not turn up any better information. Then this editor got a call from his sister-in-law, of all people, who’d recently signed a lease in the Merkel area, just west of Abilene. That area, she said, is reputed to be the far southeastern fringe of the heightened activity. No $300 deal there—nothing close to it—but at least there was a flicker of activity in those parts.

Then we learned, from another source in Merkel, that the shale bed in question had always been known—it just hadn’t been deemed feasible, at least not in pre-horizontal-drilling days. “It is a thin bed,” this source said, “at least in places. And in decades past no one thought it was an adequate pay zone.”

Well, possibly that has changed. At any rate, armed with that information, or lack thereof, I set out to Fisher County on March 19 to see what I could learn.

Thinly populated Fisher County, whose southern border lies a few miles above I-20, in the region north of Sweetwater, has not been known for much more than agriculture. Its two largest towns, Roby and Rotan, are its only towns. And neither is much more than a one-traffic-light town.

On this Monday, the county courthouse in Roby is hemmed with vehicles. Inside, I’m told it’s a “slow day.” Most of these landmen come here from farflung locations, so they use Monday as a travel day.

One landman tells me that on “normal” weekdays, some 30 to 60 landmen are here doing research. Himself, he’s been here “five or six weeks.”

I asked him what the name was for this shale play. He replied, “I asked my client what formation he was after, but I never got an answer.”

The same comes from others—they’ve not heard what this play is called.

Another source who also did not want to be named said that hardly any drilling has happened here yet. The activity has been almost entirely leasing.

Next door, Pat Thomson, County Clerk for Fisher County, works amidst a constant traffic of people through her offices. Thomson can be more definitive, and she is.

“We’ve been fairly busy since October of 2011 with leasing,” she says, and she confirms the 30-to-60-landmen-a-day estimate. “What’s happening here is research,” she says. “They go elsewhere to do the leasing. And then [later] we do the filing. We had 273 oil and gas leases last month. Which is a lot for us.”

How does that compare with their norm?

“We don’t really have a ‘norm,’” Thomson said, citing the fact that this is all so new to them. There was some leasing activity as far back as a year ago, but nothing like what they are seeing now.

The leases are largely concentrated on the northwest part of the county, north and west of Rotan.

“But things started off in the southwest,” she said. “And I’ve had some guys in here who said they were also working in Scurry County and then they even went up to Kent County to do some work. And someone said they thought there was going to be some leasing on the Jones County line, which is east of here.”

From here it’s off to the Big Country Electric Cooperative office, a few blocks away, where I learn from Dalvin Alexander, Electrical System Manager, that two of the county’s electrical substations are scheduled for upgrades.

Is that to accommodate greater demand brought on by anticipated oil and gas development? Alexander said he can’t confirm that. But he said that word had reached him that 29 drilling rigs are on the way to the Snyder area within the next 60 days, and he considers this part of the world to be part of the “Snyder area.”

Fredda Buckner, manager of this cooperative, confirmed Alexander’s figure of 29 rigs. Buckner said she had heard that a well had been drilled a few miles east of Rotan. Lease prices have been climbing, she said. A year ago, the high prices were around $200. Now some are above $350.

Next stop: Rotan, ten miles north. Stepping out the front door of Big Country Electric, one is greeted by a panoramic sweep of prairie, with a horizon dominated, some 15-20 miles north, by the Double Mountains. A wind farm is slated for construction to the southwest of the two rocky heights—this much confirmed by the electrical coop.

Fisher County was ravaged by one of Texas’ worst wildfires a year ago, and the tale of that fire is told by the landscape between Roby and Rotan. Halfway there, one sees Fisher County Hospital, which had to be evacuated to keep staff and patients safe.

In Rotan, at Allsup’s convenience store, I learned that there are oil and gas workers in town, staying at the motel. At the Dairy Queen, one local remarked that, yes, a well had been drilled east of town, and three or four others had been staked.

“It’s all about to bust loose in the next 60 days,” he said.

Heading east on 92, it’s bluebonnets and tumbleweeds just outside Rotan. Off to the north are those Double Mountains, which I’d learned were landmarks for the early buffalo hunters. Sammy Baugh—for those football fans reading this—had his ranch near those mountains, and though Baugh died a couple of years ago, his son still runs that operation.

A short drive confirms the just-completed well. The derrick’s gone, but a pumping unit is active, less than two weeks old. Out by the wellsite I hailed down a pickup driving by—driven by Jeremy Presley, who is out here constructing roads. He points to where another well was completed and others are to start.

Has he heard a name given for this shale play? No. He has an idea, but it’s nothing he can confirm. But Presley did allow that there are frac trucks working in the area now.

About half a dozen of them, he said. And this is something new. “I’ve worked around them before, but not in this area,” he said. “And more are on the way.”

That, apparently, is part of what occupies him out in these parts, with road building.

“I’ve got 100 more coming,” he said. “They’ll be here in a month.”

It’s late in the day, and nothing more to learn here. It would be nice to know what this shale play is called, but it’s likely a reader will tell us that within the month.

Meanwhile, the Double Mountains bask golden in the dying light. Landmark in the Indian Wars, witness to buffalo migrations for centuries, witness to the disappearance of the same and to settlement and even to wildfires in our own time, those hills stand over another swift change in a big country.

FORMATION NORTHWEST OF ABILENE DRAWS ATTENTION OF OIL EXPLORATION COMPANIES

By Jaime Adame
Published Tuesday, January 17, 2012

With interest in oil and gas production rising along with the price of oil, the industry is turning an eye to a rock formation northwest of Abilene, local experts said.

In the Abilene region, “the biggest thing is a leasing play occurring in northern Fisher County and western Nolan County and Mitchell and Scurry counties for a potential shale that may be oil and gas productive,” said Allan Frizzell, a district vice president for the Texas Oil & Gas Association and vice president of Abilene-based Enrich Oil Corp.

Such a “leasing play” is a rush to acquire mineral rights from landowners.

“It’s pretty speculative, but the lease bonus money being paid to mineral owners is pretty high and is injecting a lot of revenue into local banks,” said Frizzell, explaining that “it’s in its infancy, as far as the drilling and completion phase.”

Mark McKeehan, past-president of the Abilene Geological Society, said about the geologic formation that “everybody’s known it shows oil and gas for long time.”

But now producers have the ability to use techniques such as hydraulic fracturing, commonplace in exploring rock formations such as the Barnett Shale and Eagle Ford Shale in Texas.

In the area northwest of Abilene, “the technology’s catching up with it: the ability to go in there and ‘frac’ the thing and open it up has caused it to be a potential moneymaker for the people in that area,” said McKeehan.

Such fracking techniques have come under fire from environmental critics who have complained about potential contamination of groundwater from fracking or waste produced by the fracking process, with the Environmental Protection Agency studying any potential harmful effects.

Frizzell emphasized the depth of the formation.

“It’s very deep. It ranges from 5,000 to 7,000 feet deep, so it’ll be safe. Groundwater resources will be very safe,” Frizzell said.

McKeehan said landowners in the region “are benefiting tremendously from this.”

“I’m not sure exactly what the monetary interest is that the landowners are receiving, but I know they’re getting a premium for the land right now,” he added.

Exploration companies aggressively pursue such deals before drilling to bolster their stake in whatever may be produced by the formation, McKeehan said.

The next step won’t be cheap for exploration companies, McKeehan said.

“The wells will be expensive to drill. They’ll be horizontal, and they’ll have to put a big frac treatment on it, so they’re going to be expensive,” McKeehan said.

The formation is not as big or as thick as other Texas formations, McKeehan said, calling it “much smaller” than the Barnett Shale region in the Fort Worth area.

Frizzell said other production areas getting a boost include the region near Throckmorton, with horizontal drilling techniques being used in some cases.

He said a spike in drilling in the Permian Basin region has benefitted many Abilene businesses.

“In the Abilene area, the service companies seem to be keeping up with the activity there, such as the trucking and well logging and well servicing and supply stores, seem to be keeping up with the demand,” Frizzell said, adding that the spike in sales tax revenue is likely related to rising revenues from oil and gas activity.

As for the formation northwest of Abilene, Frizzell said he thinks drilling will start this year. McKeehan said he expects drilling to start within six months, with no guarantees of a quick success.

“I’m sure there’ll be a lot of a learning curve involved, and some techniques will work and some won’t,” McKeehan said. “It’s going to be kind of a work in progress.”

McKeehan said the formation “has all the right characteristics … like the shales” in the Permian Basin.

Until drilling begins, however, “the jury’s still out on it out right now,” McKeehan said.

By Jesse Mullins