New Mexico Oil & Gas Production

1. New Mexico Oil & Gas Production By Ron Broadhead New Mexico Bureau of Geology and Mineral Resources a Division of New Mexico Tech Socorro, NM 87801 This slide set accompanied a presentation given to the House Energy and Natural Resources Committee (Rep. Brian Egolf, Chairman) of the New Mexico State Legislature on February 3, 2012 by Ron Broadhead, Principal Senior Petroleum Geologist at the New Mexico Bureau of Geology and Mineral Resources (a Division of New Mexico Tech). The slide set is identical to that given to the Legislative Committee except that slides have been given brief figure captions to place them in the context of the presentation and slide source material has been cited and referenced.

2. New Mexico Oil & Gas Production Approximately 2/3 of natural gas production has been obtained from conventional and tight sandstone reservoirs in the San Juan Basin (green) and the Permian Basin (red). The reservoirs in the gas wells that provide this production have almost all been fracked in order to yield economic levels of production. Natural gas obtained from coal beds in the San Juan Basin accounts for about 1/3 of state gas production and is in current decline. Natural gas has been produced from coal beds in the Raton Basin for the last 10 years and accounts for about 2% of state production. Graph from Broadhead and Price (2012). New Mexico has obtained oil and natural gas production from 3 basins: the Permian Basin, the San Juan Basin, and the Raton Basin. the Tucumcari Basin is an emerging frontier basin in which discoveries of natural gas have been made in the last few years. New Mexico oil production reached its peak in the late 1960’s and early 1970’s and has since been in decline. The noticeable increase in production over the last 2 years Is due to drilling and completion of horizontal wells with the new multistage fracking techniques in low permeability formations of the Permian Basin.

3. San JuanBasin As this cross section shows, strata in the San Juan Basin dip gently down into the basin from the south and more steeply from the north. Natural gas and oil production has been traditionally obtained from the strata shown in blue, which are mostly tight gas sands (except for the coals of the Fruitland Formation). Minor shale gas has been produced from the Lewis Shale from vertical wells that have been productive from deeper, conventional reservoir – these do not represent a full test of Lewis shale gas potential as horizontal wells with multistage fracks are needed for that. The deeper Mancos Shale, having been buried deeper and thus more thermally mature may be a more attractive shale gas target, as well as a target for unconventional Oil in some areas. Cross section modified from Stone and others (1983) to indicate strata productive of natural gas and oil.

4. San Juan Basin Basin flank oil potential On the basin flanks the Mancos Shale is within the oil window and is currently a target for unconventional oil exploration. The Lewis Shale is thermally immature and within the biogenic gas window in these areas. Deep basin gas potential Within the deepest parts of the San Juan Basin as reflected by the thermal maturation profile of this well, the Mancos Shale has been thoroughly “cooked” within the basin’s “hydrocarbon kitchen” and is within the thermogenic gas window – shale gas potential is optimal. It is only within the deepest parts of the basin where the Lewis Shale is within the gas window.

5. Permian Basin Brown = strata with most shale gas potential Green = strata with most ongoing unconventional oil drilling The Permian Basin contains several attractive targets for shale gas, including the Devonian Woodford Shale, the Mississippian Barnett Shale, and the Permian Wolfcamp shale. Low permeability siltstone reservoirs in the Bone Spring Formation are currently active targets for unconventional oil by drilling horizontal wells stimulated with multistage frack jobs and significant oil production has resulted. Other low-permeability reservoirs that have added significant oil production through application of horizontal drilling and multi-stage frack jobs in the past 2 to 3 years include the Yeso and Abo Formations on the Northwest Shelf and the Brushy Canyon sandstones in the deep Delaware Basin.

6. Depth to Barnett Shale Barnett Shale Permian Basin The Barnett Shale is an example of a target for shale gas in the deep basin where in places it is present at depths exceeding 15,000 ft. Geological characterization helps define a northwest-trending shale gas exploration fairway. Outside of this fairway potential may include unconventional oil. Maps from Broadhead and Gillard (2007) and Broadhead (2009). Barnett gas exploration fairway

7. Bone Spring Formation Permian Basin The Avalon shale of the Bone Spring Formation contains substantial resources of unconventional oil. In the last two years, it has seen extensive exploration and drilling activity – oil can be produced from this reservoir through the application of horizontal drilling and multi-stage fracking. Before development of these new technologies 10 years ago, the unconventional oil resource in the Bone Spring could not have been produced and Bone Spring production was limited to a relatively few smaller conventional reservoirs (shown in gray).

8. Raton Basin Since 2000 the New Mexico part of the Raton Basin has been productive of natural gas reservoired in shallow ( < 2700 ft deep) coal beds of the Raton and Vermejo Formations. In the 1970’s, a single well produced shale gas from the Pierre and Niobrara Shales and supplied the gas needs of Vermejo Ranch. Recently 4 vertical wells have been drilled to evaluate shale gas potential of the Pierre and Niobrara Shales and have produced small volumes of gas. Because these wells wee drilled vertically and not horizontally through the shales, they may not represent a full evaluation of shale gas potential at the places they have been drilled. Map modified from Broadhead (2008).

9. Raton Basin This west-to-east cross section through the Raton Basin shows the structure of the strata within the Basin. It has been stretched vertically to allow for easier inspection. Natural gas has been produced from coals in the Vermejo and Raton Formations. Primary shale gas potential is within the deeper parts of the basin in the Pierre and Niobrara Shales where they have been “cooked” into the gas window. On the shallow flanks of the basin, these shales are within the oil and biogenic gas windows and shale-gas potential is lower. Cross section modified from Broadhead (2010).

10. Tucumcari Basin – an emerging gas basin Reservoirs are Pennsylvanian (Strawn and Canyon) sandstones interbedded with organic-rich shales in in deeply buried elevator basins. In these basins, the shales have been cooked and have generated gas. Reservoirs are sandstones of limited permeability that will need to be fracked. Horizontal drilling combined with fracking may be required for optimal recovery in some places. Cross section and map from Broadhead (2001). The Tucumcari Basin of east-central New Mexico is an emerging gas basin following recent discoveries of natural gas. Gas liquids as well as oil might also be present in parts of the basin.

11. References cited for figures in slide set Broadhead, R.F., 2001, New Mexico elevator basins -1: Petroleum systems studied in southern Ancestral Rocky Mountains: Oil and Gas Journal, v. 99, no. 2, p. 32-38. Broadhead, R.F., and Gillard, L., 2007, The Barnett Shale in southeastern New Mexico: Distribution, thickness, and source rock characterization: New Mexico Bureau of Geology and Mineral Resources, Open-file report 502, 56 p. plus plates. Broadhead, R.F., 2008, The natural gas potential of north-central New Mexico: Colfax, Mora and Taos Counties: New Mexico Bureau of Geology and Mineral Resources, Open-file report 510, 145 p. plus plates. Broadhead, R.F., 2009, Mississippian strata of southeastern New Mexico: Distribution, structure, and hydrocarbon plays: New Mexico Geology, v. 31, no. 3, p. 65-76. Broadhead, R.F., 2010, Oil and natural gas potential of the pre-Cretaceous section, Raton Basin, New Mexico: American Association of Petroleum Geologists, Search and Discovery, Article No. 10260, 24 p. Broadhead, R.F., and Price, L.G., 2012, New Mexico’s natural gas resources: New Mexico Bureau of Geology and Mineral Resources, Earth Matters, Winter 2012. Stone, W.J., Lyford, F.P., Frenzel, P.F., Mizell, N.H., and Padgett, E.T., 1983, Hydrogeology and water resources of San Juan Basin, New Mexico: New Mexico Bureau of Mines and Mineral Resources, Hydrologic Report 6, 70 p. plus plates.