Wolfcamp Formation Discovery: 20 Billion Barrels
The Wolfcamp shale formation is found in the Midland Basin portion of Texas’ Permian Basin province. Last week, the United States Geological Survey (USGS) announced its assessment of the Wolfcamp formation at 20 billion barrels of oil and 16 billion cubic feet of natural gas.
These findings make Wolfcamp nearly three times larger than the 2013 USGS assessment of North Dakota’s Bakken-Three Forks formation and the largest continuous oil accumulation ever assessed in the United States.
According to the USGS, the “estimate is for continuous (unconventional) oil, and consists of undiscovered, technically recoverable resources.”
Explains Walter Guidroz, program coordinator for the USGS Energy Resources Program: “Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world.”
“Oilsands Should Fear Texas”
The Huffington Post Canada (HPC) posted an article last week stating “Canada’s oilsands should fear Texas”. The article points to estimates of oil in the Wolfcamp formation being worth roughly US$900 billion at current prices and highlights how Alberta’s oilsands product already sells at a ‘discount’ compared to North American benchmark pricing.
Writes HP’s Daniel Tencer: “The possibility that an oil field three times as large as North Dakota’s Bakken could one day be fully exploited presents a threat to the future of Alberta’s oilsands, already struggling with low oil prices that have halted investment in new projects.”
A number of factors contribute to the long-time discount on Canadian oilsands product but poor market access from Alberta and a boom in oil production are widely cited as two of the most important.
The Wolfcamp assessment and continued struggles in Canada to get major pipelines approved, seem to make matters worse for Alberta’s oil patch. For its part, the Liberal government appears to be more focused on gaining access to the Asian market than oil finds south of the border.
Keystone XL Less Important
The Texas brings into question the viability of Keystone XL, which was given new life with Donald Trump winning this month’s US presidential election. President-elect Trump promised during his campaign to approve the Keystone XL Pipeline.
A recent CBC News article quotes Alberta Energy Minister Margaret McCuaig-Boyd: “while government and industry are still assessing what is best when it comes to Keystone XL, it’s clear that shipping vast quantities of oil to the United States is no longer the preferred option”.
Federal Natural Resources Minister Jim Carr echoed these sentiments when he said last week that Keystone XL is less of a priority for Canada.
No Short-Term Impact, Another OPEC
The CBC article, however, reassures that “experts on both sides of the border said the Wolfcamp formation will not cause any major disruptions to Canadian oil markets in the immediate term.”
While one Canadian expert called the announcement ‘overcooked’, another sees the discovery as having the potential to benefit all of North America.Put Canada, the US and Mexico together with our reserves and potential output — we're another OPEC Click To Tweet
Bernard Weinstein, associate director of the Maguire Energy Institute in Dallas told the CBC: “Indeed, if you put Canada, the United States and Mexico together and you look at our reserves and our potential output — we’re another OPEC.”