Permian Basin - Applying CPR to a Giant: SACROC Unit
The Scurry Area Canyon Reef Operators Committee (SACROC) Unit comprises the majority of the Kelly-Snyder Field of West Texas. With approximately three billion barrels of original oil in place it classifies as a giant of fields. The decade of the 1990s found operations at a critical milestone: production had been dropping more than 20% per year from a peak of 210,000 BOPD in the mid-70s to only 9,000 BOPD in 1995. The Unit had been subjected to CO2 since 1972. The Unit was considered to be very mature by the mid-90s (some owners used worse in-house terminology). Much of the Unit cost structure was driven by old contracts with out-of-date terms, excessive rates, and obligations that were difficult to manage. The Unit owners were faced with a significant abandonment effort, and the estimated economic limit was rapidly approaching. The Unit had all the signs of impending heart failure. Rather than face the prospect of negative cash flow and abandonment liability, the owners decided upon a long-term plan in an attempt to arrest the production decline, reduce expenditures, and ultimately restore the economic viability of the Unit. The current operator, in addition to reducing costs has doubled production since acquiring SACROC in 2000. Immediate application of some CPR steps (to be discussed) and proper dosage of the “magical elixir” has given new life to this aging giant. As Rich Kinder likes to say, “the best is yet to come”.
Location:
Westlake Club, 570 Westlake Park Blvd.