Richard Mason

The oil and gas renaissance under way in the Permian Basin now involves an issue of Shakespearean proportions. Picture the balcony scene from Romeo and Juliet where Romeo, a Montague, espies Juliet, a Capulet—two star-crossed lovers from families in a long-running Hatfield-McCoy dispute. Would a rose, Juliet asks, smell as sweet under any other name?

So it is with the Cline shale, the latest in a series of new horizontal tight-oil plays revitalizing the Permian Basin.

At issue is nomenclature. Pick a stratigraphic column, any column. Where does the Pennsylvanian-Permian boundary lie? It is universally agreed that the Wolfcamp formation, the major focus of the rapidly developing tight-oil play in both the Delaware and Midland sub-basins, is considered lower Permian.

But there, underneath the Wolfcamp, sit the Cisco and Canyon formations, variously referred to as the Penn shale, or the Cline shale, both of which are considered Pennsylvanian in age. Apparently some geologists say "po-tay-to" while others say "po-tah-to" when it comes to the play that will be the focus of a half-dozen operators' drilling campaigns this summer.

The debate is whether the Cline, or the Cisco and Canyon, should be attached stratigraphically to the lower Wolfcamp sequence. According to Pioneer Natural Resources, the Wolfcamp consists of four members, labeled alphabetically in descending order from A to D, with the C and D sections equivalent to the Cisco and Canyon formations. Others see it differently, describing a stratigraphic column that moves down through the lower Permian Wolfcamp and into the Pennsylvanian Canyon, Penn shale, and Cline intervals.

The evidence grows that the Cline, the hottest new prospect in the venerable 90-year history of the Permian, represents yet another iteration of the ubiquitous Wolf-camp, which the industry is targeting with horizontal drilling and multistage fracturing from west to east across the Permian, and now from south to north.

There is commingled production from the Midland Basin Wolfberry (Wolfcamp/ Spraberry), the Delaware Basin Wolfbone (Wolfcamp/Bone Spring 3), and the lower Midland Basin Wolffork (Wolfcamp/Clear Fork). Little wonder why the Cline can generate a verbal war of Capulet-Montague proportions in the geologic profession.

Wherever the Cline lands in the stratigraphic debate, the big news as 2012 unfolds is the extent of this tight-oil play, which now spans from the Midland Basin onto the Eastern Shelf (violating the old Permian maxim never to drill east of Big Spring, Texas), and northwest more than 100 miles to where Concho Resources has drilled its first Cline test in Terry County, southwest of Lubbock.

Consider the current Cline lineup. Devon Energy Corp. recently assembled 500,000 acres along the edge of the Eastern Shelf in the southern Midland Basin and is drilling the first of a 15-well, $250-million lease-and-drill program testing the Cline this summer. Devon will employ 7,000-foot laterals targeting a formation that could yield 3.6 million barrels of oil equivalent in unrisked resource potential from its holdings.

Nearby, Range Resources Corp. has a one-rig vertical Wolfberry program that will also incorporate three horizontal Cline tests this summer. At 50-acre spacing, Range has 2,000 potential Cline targets across its 100,000-acre position.

Also nearby is Laredo Petroleum Holdings Inc., which has drilled 28 horizontal Cline wells since 2008 in Glasscock and Reagan counties. Laredo employs 4,000-foot laterals with 15-stage fracs, targeting 530 barrels of oil equivalent per day on a 30-day initial production test. Laredo has identified 900 horizontal Cline locations with current well costs of $6.5 million.

But the significance for those inclined to exploit the Cline resides in the implications of Concho's 67,000 acres at the opposite end of the Midland Basin southwest of Lubbock, and in comments Pioneer management made at the April 2012 Hart Energy DUG Conference & Exhibition held in Fort Worth. Pioneer chief executive Scott Sheffield noted that the prospective horizontal Wolfcamp—inclusive of the Cline—underlies the entire Midland Basin.

Whether encapsulated into the broader Wolfcamp or not, the Cline is part of a billion-barrel-potential oil play that may eclipse production to date from the Permian's 50-year-old giant, the Spraberry Trend.