Apache Corp makes biggest energy find in a decade
A significant discovery in West Texas’ Permain Basin has revealed Apache Corporation could be sitting on three billion barrels of oil
An Apache Corporation drilling operation in Texas. The oil discovery in the Permain Basin is the company's biggest in a decade and could hold three billion barrels
On September 7, energy producer Apache Corporation announced it had discovered the equivalent of three billion barrels of oil in a previously overlooked area of West Texas. The newly-discovered oil field covers an area 20 times that of Manhattan, and promises to be one of the largest energy finds of the last decade.
The oil field, which Apache has named “Alpine High”, lies in the southern portion of the Delaware basin, in an area which had previously been thought to contain too much clay, making hydraulic fracturing near impossible. Apache, ignoring these doubts, secured the drilling rights to Alpine High two years ago for the low price of $1,300 an acre. Considering acres in other parts of Texas cost as much as $30,000, Apache’s investment in this area will prove extremely lucrative.
Since acquiring some 307,000 acres of Alpine High land, Apache has disproved many of the misconceptions about the area, showing the region to be both oil rich and easy to frack. Apache’s initial assessment of the region estimates the field contains 75 trillion cubic feet of gas, and three billion barrels of oil, with further exploration set to reveal an even greater yield.
Apache secured the drilling rights to Alpine High two years ago for the low price of $1,300 an acre
Apache’s plans to develop its acreage position will be launched immediately. It will be increasing its 2016 budget from $1.8bn to $2bn, and has drawn up plans for between 2,000 and 3,000 future drilling locations in the Woodford and Barnett regions of the basin.
While Alpine High promises to transform Apache, it may take years to unlock the area’s true potential due to a severe lack of infrastructure in the region. In an attempt to leapfrog this obstacle, the company will funnel 40 percent of this year’s Alpine High budget into processing equipment and pipeline production. Although it will soon be installing a temporary processing unit in the area, Apache does not expect to be running at full capacity until 2018.
“This is a world class resource”, Apache Chief Executive Jon Christmann said at a Barclays conference on Wednesday. “This really is a giant onion that is going to take us years and years to peel back and uncover. The industry dogma about this area, all the fundamental premises that most people had about it, were just wrong.”
While the oil industry has struggled in recent years to find new resources, Apache’s momentous discovery shows there are still plenty of oil sources to be exploited. Yet as shale prices remain low, oil producers may remain reluctant to take such calculated risks.
