While most people can experience firsthand the power of new technologies revolutionizing consumer products, fewer people are aware of how new technologies are changing the workings of the oil and gas industry.

In shale reservoirs across North America, hydraulic fracturing and horizontal drilling are allowing energy companies to extract massive quantities of oil and natural gas from reserves previously thought to be unrecoverable. In deep-sea locations in the Gulf of Mexico and off the coasts of Angola, Sierra Leone, and Nigeria, semi-submersibles weighing tens of thousands of tons are doing the same.

And in the Permian Basin of West Texas and eastern New Mexico, the application of technologies such as horizontal drilling, multi-stage hydraulic fracturing, and enhanced oil recovery are leading to a veritable revival of the play, which was thought to be largely tapped out after its production peaked in the early 1970s.


Let's take a closer look at these techniques one by one and see how they've helped boost Permian production to multi-decade highs.

Stacked pay, longer laterals, and more fracturing stages
One of the features that is quite unique to the Permian is the prevalence of multiple pay zones within a single play. This is known as "stacked-pay potential" and has the advantage of letting explorers and producers tap oil at varying depths from a single vertical well.

For instance, multiple pay zones are a defining characteristic of the Wolfcamp play, perhaps the most promising play within the Permian. Numerous analysts have expressed their bullishness about its potential, with RBC Capital Markets calling it "one of the hottest emerging oil plays in the U.S." and Paul McDonald of Pioneer Natural Resources claiming that it "has the potential to be the largest resource play in the U.S."

The Wolfcamp is one part of the Wolfberry play, with the other part being the Spraberry formation. Located right above the Cline Shale, it covers roughly 1 million acres and can be found at depths of between 7,000 and 10,500 feet.

With porosity between 4%-12%, high silica content, and several productive zones, or "benches," including the Upper Wolfcamp, the Middle Wolfcamp, and the Lower Wolfcamp, the formation displays some of the petrophysical qualities of a top-notch unconventional play.

Estimated ultimate recoveries, or EURs, have been quite impressive, averaging around 600,000 barrels of oil equivalent, while the percentage of oil produced has regularly exceeded 80%. The main reason why explorers and producers operating in the Wolfcamp are seeing such sharp increases in the quantity of oil recovered is because they're drilling deeper and employing a greater number of fracturing stages.

For instance, Apache , the largest leaseholder in the Permian, has drilled laterals often deeper than 8,000 feet with 30-plus fracturing stages in the Upper Wolfcamp. The result has been EURs that are significantly higher than the average for the play.

In addition to drilling deeper and using more fracturing stages in stacked-pay plays, other popular methods of maximizing recovery rates in the Permian have included secondary and tertiary oil recovery methods, including waterflooding and enhanced oil recovery, or EOR.

Waterflooding
Basically, oil production can be categorized into three phases - primary, secondary, and tertiary. Primary oil recovery entails producing those hydrocarbons that rise to the surface on their own, or those that can be extracted through lift devices like pump jacks. Secondary oil recovery involves using water and gas injections to force the oil to the surface.

The secondary oil recovery technique of waterflooding, which involves injecting hot water into a reservoir to drive large quantities of oil and gas into nearby producing wells, is another recovery method that has quickly gained importance in the Permian. While the technique has been implemented for decades, its success in tight oil formations and its relatively low cost compared to tertiary methods have driven its increased usage in recent years.

Pioneer Natural Resources is one operator that has made extensive use of waterflood injection technology in the Spraberry formation, which has been met with considerable success. Even LINN Energy , which generally uses more conventional recovery methods in its Wolfberry acreage, has utilized waterflooding in its non-Wolfberry operations in the Permian.

Enhanced oil recovery
However, while relatively quick and easy, waterflooding can often leave significant quantities of potentially recoverable oil within the well. But with tertiary production, or EOR, well recovery rates can be as high as 75%.  

The three primary types of EOR are chemical flooding, thermal recovery, and gas injection (involving the injection of natural gas, nitrogen, or carbon dioxide, unlike gas injection in the secondary phase) - the most popular method among Permian Basin operators.

For instance, Occidental Petroleum , one of the largest players in the Permian, has made extensive use of gas injections, specifically carbon dioxide, to boost recovery rates. This technique entails injecting carbon dioxide into a reservoir, which then either expands and pushes hydrocarbons through the reservoir, or mixes with the oil, thereby making it less viscous and allowing it to flow more freely. Carbon dioxide flooding accounts for approximately two-thirds of Occidental's total Permian production.

Final thoughts
Over the past five years or so, new drilling technologies have transformed the Permian Basin into a hotbed of activity that now rivals even the Bakken and Eagle Ford shales. Horizontal drilling, multi-stage hydraulic fracturing, and enhanced oil recovery techniques have allowed oil and gas producers to tap the play's previously unrecoverable unconventional reserves, as opposed to the conventional reserves that were largely depleted over nine decades of drilling.

Thanks to this successful transition, the Permian's future looks brighter than ever. According to BENTEK Energy, Permian crude oil production will rise by 60% by the end of 2016 to over 1.8 million barrels per day, up from 1.3 million barrels per day currently. And with the flurry of upcoming pipeline projects linking Permian production to the Gulf Coast, this recently resuscitated play should definitely be one worth watching for years to come.

The rapid growth in crude oil production from the Permian Basin and other domestic plays is also creating tremendous opportunity for midstream companies, which are absolutely necessary to relieve various regional bottlenecks. Enterprise Products Partners, with its superior integrated asset base, can profit from the massive bottlenecks in takeaway capacity by taking on large-scale projects. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool's brand-new premium research report on the company.

The article How Technology Is Unleashing the Permian Basin's Potential originally appeared on Fool.com.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool owns shares of Apache. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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