BHP Billiton - The New Era of Shale

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THE WORLD’S NEWSSTAND®

Contents
2 The Company
4 Operating Principles
6 The Growth of U.S. Onshore Oil and Gas
10 Building the Wells
12 The Move into Shale
14 The Eagle Ford Shale
22 The Permian Basin
26 The Haynesville Shale
30 The Fayetteville Shale
34 Zero Harm
36 Good Neighbors
38 Avoiding Potential Roadblocks
40 Company Profiles

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“Every time we look at
the opportunities in our
shale oil and gas plays,
they get larger.

MIKE YEAGER
CHIEF EXECUTIVE
BHP BILLITON PETROLEUM

We know the resources are
there. Our job is to deliver
them safely and in an
environmentally responsible
way. We are in this business
for the long haul, and we are
going to do it right.”

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2 BHP Billiton

The Company
Houston-based BHP Billiton Petroleum
delivers nearly one fourth of the annual earnings
of the BHP Billiton Group.

BHP Billion Petroleum’s exploration, development, Philippines, India, and Malaysia. Between 2007 and
production, and marketing activities span more than 2011, BHP Billiton Petroleum brought five world-class
a dozen countries. The company holds significant developments on stream.
positions in the deepwater Gulf of Mexico and
onshore United States as well as in Australia, the The company entered the onshore shale business with the $4.75
billion Fayetteville Shale acquisition in April, 2011, but that was
United Kingdom, Algeria, Trinidad and Tobago, and
just the first step. It strengthened its U.S. onshore position later in
Pakistan. It also has promising prospects in the the year through the $15 billion acquisition of Petrohawk Energy

BHP Billiton Petroleum’s Seismic Processing and Imaging Team has numerous technology projects with research institutions around the world.

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BHP Billiton 3

BHP Billiton Petroleum’s Shenzi deepwater platform in the Gulf of Mexico began production in 2009.

Corporation, which gave it major stakes in the Haynesville, Eagle BHP Billiton Petroleum has close to 4,000 employees globally,
Ford, and Permian basins to complement its Fayetteville position. and is deeply committed to their safety. The company has the
Since then, the U.S. onshore workforce has doubled. BHP Billiton systems in place to ensure its employees return home unharmed
Petroleum operates some 45 land drilling rigs in the United States in at the end of the day, and it continually strives to improve its
addition to its deepwater drilling around the world. sterling safety performance.

BHP Billiton Petroleum is now among the largest independent As a global producer, exporter, and consumer of energy, BHP Billiton
oil and gas companies in terms of both its total production and understands the need to conserve energy and the risks of climate
resource base. Its shale assets in North America are some of the change. Since 2006, it has achieved an 16 percent reduction in
most valuable, high-quality resources in the world. greenhouse gas emissions per volume of production, exceeding its
public target of a six percent reduction by 2012.
The company’s business is built on a powerful platform of
rigorous safety standards, high quality oil and gas resources,
functional excellence, operating discipline, and financial strength.
It has the people and skills to take on complicated and diverse
opportunities, and the flexibility to move quickly to deliver value
in any environment.

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4 BHP Billiton

Operating Principles
These five basic operating principles shape everything
BHP Billiton Petroleum does as a company and serve
as its pledge to local communities.

1. To be the safest company in the industry We are committed to restoring the environment
when we complete our operations to ensure it is
We carefully develop and rigorously implement safety
as healthy and robust as before we arrived.
and operating systems, properly train our people, and
will not compromise our behavioral standards.
3. We will safeguard and manage water resources
We only work with contractors who share
our commitment to safety. We minimize our impact on fresh water by utilizing
alternate sources wherever possible.
We partner with local communities to prepare
them to respond to unplanned events. We do not dispose wastewater into any
surface source (streams, lakes, rivers).
2. We will protect the land where we operate We do not drill or conduct hydraulic fracturing operations
unless we are confident that groundwater will be protected.
We install and operate our wells and facilities in
the most environmentally sensitive manner.
4. We will minimize air emissions from our
We look for opportunities to drill multiple wells from a
single pad to reduce the size of our surface footprint. operations
We conduct environmental assessments prior to We conduct our operations in a manner
the execution of work to properly plan for and that minimizes flaring and venting.
minimize the impacts of our operations. We use alternative or cleaner-fuel source technologies.
We have one of the most modern and operationally
efficient drilling fleets in the onshore industry.

5. We will be a good neighbor to our communities
We look for ways to make our operations
less intrusive to the community.
We publicly disclose the chemicals that are used
in our hydraulic fracturing operations.
We work with state and local officials to find workable
solutions to common industry problems.
We give back to the community in a meaningful way
through social investment and partnerships.

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BHP Billiton 5

Safety is BHP Billiton Petroleum’s primary concern. The company
recognizes that the business of finding, extracting, and delivering
hydrocarbons is full of potential hazards, and its commitment to
the safety of its employees and contractors is one reason that,
statistically, they are less likely to be injured at work than they are
in their own homes.

Every employee and contractor, no matter what their position, has
the right and obligation to speak up if they have doubts about any
activity. If they can’t be certain of the task at hand, they are required
to either stop the job or do whatever it takes to ensure their own
safety and that of those around them.

Is the approach working? Yes. In its U.S. onshore operations, many
of the safety standards established by BHP Billiton Petroleum
have improved not only its own safety performance, but that of its
contractors and other operators as well.
Eagle Ford Drilling and Completions Manager Michael Bloom
prepares a group of journalists for a drillling rig site visit.

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6 BHP Billiton

The Growth of U.S.
Onshore Oil and Gas
It’s no secret that recent advances in hydraulic
fracturing and well completion are opening vast
new oil and gas resources. The biggest fields by
far are in North America.

An increasing portion of BHP Billion Petroleum’s
North American portfolio consists of what are
known as unconventional oil and gas plays.
While shale oil and shale gas are considered
unconventional resources, the term refers only
to the source rock, not the high-value liquids
and natural gas that come from it. Two basins in
particular, the Eagle Ford and the Permian, account
for about 40 percent of all the unconventional oil
and gas activity in the United States.

What are shale and
tight gas reservoirs?
In conventional reservoirs, hydrocarbon molecules are able to
squeeze between the grains of relatively porous rock. Above that
porous zone, however, there must be what geologists call a “trap”
or “seal” to keep the oil and natural gas from migrating all the way
to the surface.

Shale reservoirs are different. Shale and other “tight” reservoirs
don’t need traps and seals, because the source rock itself is the trap.
Hydrocarbons are caught within pore spaces that are significantly
smaller and more restrictive, and are also absorbed onto the clay
mineral particles that make up the shale. The only way hydrocarbon
molecules can move around is through natural and artificial cracks.

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BHP Billiton 7

A matter of scale
One of the biggest differences in shale oil
and gas fields is the large number of wells
needed to extract the resource.

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8 BHP Billiton

An abundance of opportunity exists in shale in the lower 48 states.
Source: Energy Information Administration based on data from various published studies. Updated: May 9, 2011.

Geologists have long been aware of the oil and gas contained in out the small operators and forcing changes within the industry.
shale, but didn’t have a way to recover it economically. That changed That’s nothing new in the oil and gas business. What’s important
on a significat scale in the mid-2000s, thanks to improvements in a to remember is that discovering, producing, and delivering
50-year-old technology known as hydraulic fracturing, or “fracing” hydrocarbons is a long-term venture. Fields take years, even
for short. Fracing uses water pressure to create networks of tiny decades, to develop. The wells being drilled now will be productive
cracks in the rock. To hold them open, sand and minute amounts of for at least the next 30 years.
a gel-like thickener are added to the water.
At the end of 2012, the company’s onshore holdings stood at 1.6
But what about market changes? million acres. Since it will take 20 years just to develop the shale
resources it knows are in the ground, the fields themselves will be
After BHP Billiton Petroleum acquired a stake in the U.S. shale active for at least the next 50 years. Few industries have lead times
oil and gas industry, the price of natural gas in the United States as long as this, or capital expenditures as large.
dropped to the lowest level in years. Such low prices are squeezing

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BHP Billiton 9

The drillers control room, known in the industry as the “dog house,” on one of BPH Billiton Petroleum’s brand new Eagle Ford rigs built to
company specifications.

Supply and demand drives the market. While the United States now What about liquids production?
has an oversupply of natural gas, Europe and Asia do not. That
will likely change in the next few years as more liquefied natural By the end of 2012, BHP Billiton Petroleum’s onshore fields
gas (LNG) receiving terminals in the United States are converted to were delivering 270,000 barrels of oil equivalent per day to U.S.
export terminals. When it becomes relatively easy to export natural customers. The hydrocarbons are a mix of oil, natural gas, and
gas, world prices should be more uniform. natural gas liquids in the current market, the liquids sell for more
than dry gas. Since many of the company’s onshore fields have
Other factors are changing the market as well. Low prices are the capacity to produce more than 50 percent liquids, it has the
encouraging some electric power producers to shift from coal to gas, flexibility to leave the dry gas in the ground for now and keep its
and chemical plants are increasing capacity to take advantage of the crews and equipment busy producing more liquids, including crude
relatively low cost of natural gas liquids. The demand for natural gas oil, which continues to sell at strong prices.
and natural gas liquids is certain to grow in the United States, the
largest and most mature market in the world.

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10 BHP Billiton

Building the Wells
At the surface
After geologists and reservoir engineers determine where the wells
should be, crews level the site, construct a lease road, erect the
drilling rig, and place support facilities on the pad. For efficiency,
and to minimize disturbance at the surface, BHP Billiton Petroleum
typically drills and completes several wells from a single pad,
directing each wellbore to a different part of the target zone. When
the wells are to be hydraulically fractured, an array of large trucks,
pumps, storage units, and control systems will be brought in for
several days. Once all the wells are completed, the perimeter of the
site is restored as close as possible to its original condition, leaving
only a minimal surface footprint.

Surface drilling and casing
Drillers start a new well by drilling a hole to a depth of
approximately 80-100 feet, and installing a large-diameter pipe
called a conductor casing, which is then cemented in place.

Protecting the water table
Once the conductor casing is set, drilling continues to a depth that
state regulatory agencies determine is well below the level of any
fresh ground water. The heavy pipe called surface casing is then
installed and cemented in place by pumping cement down the pipe.
The cement circulates to the bottom of the surface casing and rises
back to the surface on the outside of the casing, forming another
layer of protection and strength.

Horizontal drilling
Shale wells are usually completed with a horizontal section. As the
wellbore continues downward and it approaches the target shale,
drilling engineers guide the drill bit, curving the borehole until its
path is horizontal or nearly so. The finished hole may run horizontally
for a mile or more through the hydrocarbon-rich layers of rock.

Production Casing
The drilling phase is finished after drillers install and cement an
additional set of piping from the bottom of the well all the way back
to the surface, forming yet another barrier between the rock and the
inside of the well.

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BHP Billiton 11

Manufacturing wells
In most shale fields, operations continue
around the clock. Depending on the reservoir,
wells typically take 10-20 days to drill. BHP
Billiton Petroleum drills several wells from
each pad in a manufacturing-like process.

Perforating Hydraulic Fracturing
In a critical part of the completion phase, portions of the production Because shale is too dense for hydrocarbons to flow through it
casing are perforated by a series of small explosive charges, creating on their own, the wells are stimulated by pumping in fluid—
holes that are about an inch in diameter and extend as far as usually water and thickeners—and sand under very high pressure.
18 inches into the surrounding rock. These perforations provide a Downhole, the fluids push out through the perforations into the
conduit for fluid and sand to be pumped into the reservoir during the rock formation. The pressure is great enough to break the rock and
fracing stage, and afterward allow hydrocarbons into the wellbore release hydrocarbon molecules from microscopic voids in the shale.
so they can flow or be pumped to the surface. The sand, called proppant, holds the fractures open so the fluids can
flow into the wellbore and to the surface.

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12 BHP Billiton

The Move into Shale
Through purchases in 2011,
BHP Billiton Petroleum acquired major
positions in four of the largest onshore oil
and gas fields in the United States.

Two of the assets are what the industry calls liquid- People know us
rich, which means the hydrocarbons they produce BHP Billiton Petroleum’s onshore acreage in the United States lies
are largely oil and natural gas liquids, as opposed in regions where people have a long history in the oil and gas
to dry gas. In some areas, the proportion of total business and the industry is an important part of the economy.
liquids production is as high as 80 percent. The At the end of 2012, the company was producing 270,000 barrels of
company’s holdings in shale basins across Texas, oil equivalent per day from these onshore fields. That number will
grow throughout 2013, driven by more than $4 billion in drilling
Louisiana, and Arkansas contain some 8.0 billion
and completion and facility development.
barrels of oil equivalent, a U.S. domestic resource
that we will be producing over the next 50 years. Using local contractors, BHP Billiton Petroleum is building the
infrastructure to bring valuable gas and liquids to market. In 2012,
it installed some 140 miles of new pipeline in the Eagle Ford and
Permian shales, and is building another 200 miles of pipeline in 2013.

Over the next few years, the company will add six new processing
plants and lay about 800 miles of pipeline in the Eagle Ford alone.
Development in the Permian includes some 600 miles of pipeline, as
well as gas dehydration, compression, and cryogenic facilities.

These large, long-life, and low-cost assets hold tremendous
volumes, with potential for significant future development. Together,
they make BHP Billiton Petroleum one of the industry leaders in
some of the most productive shale basins in the United States.

BHP Billiton Petroleum’s size and scale give it the flexibility to
respond to market conditions. In financial year 2012, the company
adjusted its shale development plans to focus on oil rather than
gas, while maintaining its capability to ramp up in the future when
natural gas prices rebound.

A diversified portfolio of onshore oil and gas opportunities provides
extraordinary flexibility to respond to changes in the market.

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BHP Billi on 13
BHP Billiton 13
P Billiton
ll n

Home-grown energy
BHP Billiton Petroleum
works closely with landowners
to minimize its footprint.

Shale proving to be an
economic boon to the U.S.
– 1.75 million jobs created in past few years.
– New jobs expected to grow to 3 million in 2020.
– $2.5 trillion in government revenue by 2035.
– Nearly 2% of U.S. GDP over next three years.
Source: U.S. Chamber of Commerce

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14 BHP Billiton

The Eagle Ford Shale
Hydrocarbons in economic quantities were
discovered in the Eagle Ford shale in 2008.
Since then, the region has become the epicenter
of shale operations in Texas, and one of the
premiere plays in North America.

The Eagle Ford spans more than 400 miles of
south-central Texas. The heart of the play is
about 50 miles wide and has an average thickness
of 250 feet. It is a giant resource that will be
productive for many years to come.

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BHP Billiton 15

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16 BHP Billiton

BHP Billiton Petroleum’s average hydrocarbon production from the
Eagle Ford, which includes the Black Hawk and Hawkville fields,
is over 50 percent liquid hydrocarbons. With an attractive product
mix of condensate and natural gas liquids, the Eagle Ford Shale is
rated among the lowest cost plays in North America. As a result, the
economics of dry gas have much less effect on company activities.

“The rigs are working flat-out,” says Eagle Ford Production Unit
Manager Steve Pastor. “Our success is due in part to the fact that
we’re in the sweet spot of the basin. Geologically, it is among the
best of the best.”

According to a study by the independent research and consulting
group, Wood Mackenzie, BHP Billiton Petroleum has the second
most valuable position in the Eagle Ford.

The Eagle Ford includes a vast rural area of south-central Texas.

Hydraulic fracturing at night in the Eagle Ford Shale. Drilling and completions operations run non-stop, lessening America’s dependence on
foreign oil and gas.

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BHP Billiton 17

The field produces three products. First is the crude oil and
condensate, which is a high-value lighter form of crude oil. Next
is dry gas, which can often go straight into interstate pipelines
BHP Billiton Petroleum’s
and be sold directly into the market. Between the two are natural Technology Goals
gas liquids—ethane, propane, butane, and pentane—which are
• Model and understand production complexities
typically separated out in gas processing plants.
associated with nano-permeability reservoirs
In 2012, BHP Billiton Petroleum produced nearly 100,000 barrels of
oil equivalent per day from the Eagle Ford Shale, with half of that • Lead the industry in the development of static
being hydrocarbon liquids and the rest, dry gas. In the next few and dynamic shale reservoir models
years, the company aims to produce 300,000 barrels equivalent per
day from the Eagle Ford. Six new processing plants will be needed to • Improve hydraulic fracturing efficiency,
handle the volumes. BHP Billiton Petroleum will be adding 800 miles development planning, and ultimate energy
of pipeline, and has already spent more than a billion dollars on the
recovery
infrastructure.

• Identify, assess, and implement breakthrough
Reservoir modeling
technology
Commercial amounts of hydrocarbons were discovered in the Eagle
Ford Shale in 2008. The region has since seen an extraordinary
amount of development as one of the premiere shale plays in
North America. What BHP Billiton Petroleum brings to the table
is financial strength and technical depth to make the most of this
outstanding resource.

“If we can unlock the
secrets of the Eagle
Ford, we can apply that
technology elsewhere
around the world.”
Vice President of Development Planning Rob Kase.

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18 BHP Billiton

“We are now working on dynamic reservoir models of the field,”
says Rob Kase, Vice President of Development Planning. “That’s
what we do for conventional reservoirs, but it has never been done
in a shale like the Eagle Ford. “

Reservoir models are computer-based simulations of a field’s
geology. Specialists construct them using seismic data and
information from wells. Dynamic 3D models help engineers and
geoscientists predict how fluids will move through a reservoir.
Accurate models help them plan the location of new wells and
develop strategies for enhancing recovery.

The reason no one has created a dynamic model for a shale reservoir
is that the permeability of the rock is so much less than it is in a
conventional oil and gas reservoir. The rock is so “tight” that some
of the parameters geoscientists would use to model a conventional Eagle Ford Production Unit Manager Steve Pastor (left) with Eagle
reservoir just don’t apply. Ford HSEC Supervisor Harry Barnes.

“The conventional approach is difficult to use in the Eagle Ford,”
Kase says. “In a well-connected reservoir with higher permeability,
you can calculate the flow or drainage rate based on the reservoir not a strong correlation between the characteristics of the reservoir
parameters. Here, because the rock is so dense and varied, it creates and how much production you can expect from the wells.
a significant challenge.”
“Shale gas recovery factors generally run in the mid to high teens,
The flow rate from a single well, for example, can be deceiving. The and oil recovery factors between five and seven percent,” Kase
fluids might be entering the well at a uniform rate throughout the says. “If we can build a dynamic reservoir model for the Eagle Ford,
length of the completion zone, or the majority of the fluids might be I believe we can improve recoveries significantly. This will have a
coming from a narrow zone that just happens to have more natural significant impact on not only production rates, but the value of the
fractures in the rock. Without a good model of the reservoir, there is asset. The really big prize, however—if we can unlock the secrets

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BHP Billiton 19

in revenue, created 38,000 full-time jobs, and added $211 million to
local government revenues in south-central Texas.

Today, communities in the 14 counties that make up the Eagle
Ford are building new schools and hospitals and launching training
programs to help people realize the benefits of shale oil and gas
development in the regions surrounding their communities. The study
projects that up to 116,000 full-time jobs will be created by 2021.

Water in an arid land
The Eagle Ford has no surface water to speak of. Much of the area
is quite arid, but there is a world-class aquifer that has an immense
volume of fresh water in a porous sandstone that is 400 to 500 feet
thick. The problem is, the water is extraordinarily deep. While most
freshwater aquifers are no more than 400 feet below the surface,
one has to drill much deeper down to reach this one. Cities can
afford to get their water from this source, but many ranchers and
farmers can’t.
BHP Billiton Petroleum Chief Executive J. Michael Yeager (left) on a
visit to the Eagle Ford.

of the Eagle Ford—will be the ability to apply that technology
elsewhere around the world.”

Adjusting to the market
Low natural gas prices in the United States have caused dramatic
shifts in the way producing companies manage their fields. Such
cycles, driven by supply and demand, have been the nature of the
petroleum industry since 1859.

In BHP Billiton Petroleum’s case, it has shifted assets to produce
more hydrocarbon liquids and less dry gas. Since the Eagle Ford and
Permian are its most liquids-rich fields, they are getting the most
attention. Near the end of 2012, the company was running 8 rigs in
the Permian Basin and 30 in the Eagle Ford.

A new fleet of drilling rigs, most of them purpose-built for working
in shale, are now being delivered from fabrication yards on the Texas
Gulf Coast. Several units are already in service and the rest will be in
the field by mid-2013. By then, all 45 BHP Billiton Petroleum drilling
rigs will be the safest, cleanest, and most energy-efficient in the field.

A boost for local communities
Exploration, development, and production in the Eagle Ford Shale
has contributed to the economic revitalization of the region. To get enough water for drilling and hydraulic fracturing, we have
According to a 2012 study by the University of Texas at San Antonio, drilled a number of fresh water wells and turned them over to
the shale gas projects in 2011 alone generated just under $20 billion private landowners.

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20 BHP Billiton

To get the water needed for drilling and fracing wells in the are typically used for drilling only one or two wells on a pad. That
Hawkville area of the Eagle Ford, BHP Billiton Petroleum is drilling equipment is easier to move from one site to another. The skidder
these extra-deep water wells and turning them over to private rigs are designed to drill multiple wells on a pad. They are more
landowners in exchange for a share of the water. That gives it complex because they include a skidding system that allows the
the water it needs, and the property owners are happy to have a derrick to move quickly from one well to the next.”
reliable source of fresh water. How much is needed? The amount
of water needed per well for hydraulic fracturing varies from one If the idea is to drill appraisal wells, as is done in the Permian, then
field to the next, but three to five million gallons is a ballpark figure. the rigs need to be easy to move. If the rigs will be drilling large
While that sounds like a lot, it is small compared to the daily water numbers of development wells, as they are in the Eagle Ford, then
consumption of a power plant or the irrigation needs of a large rigs on skids are the answer.
farm. To ensure that it is not taking too much water or harming
the aquifer in any way, the company has retained the services of a “All 45 of our new rigs have much better control systems than the
Ph.D. geologist who lives in the area. As a landowner himself, he units they are replacing,” Cardno adds. “That makes them more
represents the community and advises local water boards. suited to drilling the type of short-radius horizontal wells we want.
These rigs can drill the curve and lateral sections of the wellbore
The drilling program much more efficiently and with a high degree of precision.”

When BHP Billiton Petroleum took over drilling in the Eagle Ford, it The new equipment is also more automated than ever before.
put a lot more hardware in the field, including 30 new rigs built to Drillers, for example, can enter set points, then take their hands off
its specifications. the controls and let the rig’s computers guide the drill string.

“Our rig fleet is entirely composed of modern AC rigs split between “These advanced rigs are inherently safer than the older ones,”
fast movers and skidders,” says Derek Cardno, the company’s vice Cardno says. “A lot of the hazards have been designed out.”
president for global drilling and completions. “The fast movers

A finished well site in the Eagle Ford field.

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BHP Billiton 21

“We’re trying to change
the way folks think
about safety in their
day-to-day business.
That’s going to take
constant vigilance.”

Vice President of Drilling Derek Cardno.

Safely managing change numbers of rigs. An engineer and superintendent work together, and
each has a certain number of rigs supported by a small team.
With 45 drilling rigs in BHP Billiton Petroleum’s U.S. onshore fleet,
part of the challenge is managing them consistently. “The hard part is getting a consistent message across all work
fronts,” Cardno says. “We’re managing that through a lot of
“We are a bigger organization now,” Cardno explains. “Smaller interaction. I receive direct reports daily. We have a morning
companies are used to working with fewer rigs. We work that way meeting every day to go through the operations and discuss issues.
ourselves in the conventional business, where we had only eight or Managers do the same down the line.”
ten work fronts at any one time around the world. They were run
by a small team. Everyone knew how each other worked. Now, in The drilling organization also brings all of the field personnel together
the unconventional plays, we are geared up to run 45 rigs and nine every three to six months. The goal is to get the same message out
frac spreads, so we have 60-70 work fronts. That is a lot to get your to everyone about the company’s expectations and its requirements
arms around.” for safety, performance, and quality. It is also an opportunity to gain
valuable feedback from the field.
Consistency is one of the most difficult things to achieve in daily
operations. When you consider that the drilling program spans “We are doing it with our service providers as well,” Cardno
not only the Eagle Ford, but three other large fields as well, the says. “We’ve met with vice presidents and CEOs of all our service
challenge is huge. companies. We brought them all together to make sure everyone
understands what we expect in terms of safety, quality, and
What Cardno and his team did is divide the drilling organization performance. We’re making great strides, but we cannot get
into smaller, more manageable chunks: Drilling managers look over complacent. We’re trying to change the way folks think about safety in
a certain number of rigs. Drilling superintendents oversee smaller their day-to-day business. That’s not going to happen overnight.”

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22 BHP Billiton

The Permian Basin
The Eagle Ford is liquids-rich, but the Permian
Basin, which covers some 75,000 square miles of
west Texas and southeastern New Mexico,
has a very high percentage of crude oil.

Although BHP Billiton Petroleum is still drilling sine waves slowly through the earth, pushing up mountains in some
appraisal wells, it is seeing liquid hydrocarbon places and leaving basins in between.

production from shale in the range of 75 percent.
The Permian is huge, and anything but consistent. There are multiple
layers of hydrocarbon-bearing rock with names like Wolfcamp,
The best wells are in the 30,000 square-mile Midland Basin and in
Sprayberry, and a blend of the two known as the Wolfberry. The
the smaller Delaware Basin, which lies to the west. Many operators
Permian includes the north and south Midland basins, a Central
are working in various parts of the Permian, which accounts for
Basin Platform and the Delaware Basin. BHP Billiton Petroleum’s
about 20 percent of all the drilling in the United States today.

BHP Billiton Petroleum has more than 440,000 acres of undeveloped
land under lease. What is it finding? One of its appraisal wells
peaked out at 500 barrels of oil and six million cubic feet of gas
per day. It’s too early to tell how many such wells it will have, but
its Permian drilling program calls for 60 new wells in 2013, and
the company is just getting started. An area known as the South
Midland is largely unexplored, but many companies are starting to
drill there now. It is a very new play for the industry in general, and
there is a lot of optimism because liquids production in some areas
could be as high as 90 percent.

Portions of the Permian Basin have been producing conventional
oil and gas since the 1920s. In 2012, the conventional part of the
Permian produced the energy equivalent of a million barrels of
oil per day. Now, with the ability to recover hydrocarbons from
unconventional plays, production from the Permian could reach two
million barrels per day by 2020.

Challenging geology of the Permian
The basin itself was formed as part of the Ouachita orogeny,
a 50-million-year era of mountain building caused when the
continents we now call North and South America bumped together
some 300 million years ago. The continental collision sent huge Lee Higgins is BHP Billiton Petroleum’s top geoscientist evaluating
the Permian Basin.

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Safer and more efficient rigs
Forty-one of the rigs in BHP Billiton Petroleum’s
45-rig fleet are new and purpose-built for
drilling in shale. The remaining four rigs are only
three years old, which means that the company
operates the most energy efficient, technically-
advanced, and safest rigs in the field.

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BHP Billiton - The New Era of Shale

BHP Billiton - The New Era of Shale

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