Innovative thinkers

Vol. 233  No. 9

Jim Henry
The three-billion-bbl Permian experiment

The oil and gas business is built on hits and misses. No major discovery was found with just one exploration well, a mental frame of mind that is familiar to Jim Henry, founder and CEO of Henry Petroleum and Henry Resources. Throughout 40-plus years of drilling in the Permian basin and experimenting with new fracturing techniques, Henry’s patience has certainly paid off. His discovery of Wolfberry field has brought the Permian basin back into the news with an estimated 3-billion-bbl play.

Along with geologist Bob Landenberger, Henry first began exploring the possibilities of what lay beneath the Midland basin in 1969, when he and Landenberger founded H&L Consultants. The duo set their sights on the Spraberry formation, a west-central Texas oil field discovered via an exploratory well in 1943.

In 1977, Henry founded Henry Petroleum and kept working on ideas to economically produce the 2,500-sq-mi basin. Over the next decade, Henry Petroleum became one of the most active producers in Spraberry field.

In the 1990s, U.S. major Arco began drilling in the area, experimenting with fracturing techniques. “They drilled 300 wells,” Henry told Permian Basin Oil and Gas magazine. “They started out just drilling Spraberry wells, and they just started adding the Upper Wolfcamp, and then they added the Middle Wolfcamp. They never added the Lower Wolfcamp.”

BP (after acquiring Arco) decided to discontinue drilling in the Wolfcamp. Soon after, Michigan-based CMA took a farm-out agreement on some of the Arco fields and was looking for a partner. Henry saw his chance, and farmed into 14 CMA locations, with 75% ownership, the remaining 25% belonging to Chevron. “And we made Chevron several billion dollars,” Henry said.

In 2003, Henry Petroleum drilled its first well, which essentially was the first discovery of the massive Wolfberry field. The first well came in at 150 bopd and Henry’s team drilled another well, 20 mi to the south of the initial exploration well. The new well flowed at 100 bopd. Henry’s engineering manager named the field Wolfberry, a combination of Wolfcamp and Spraberry. “So we knew we had a significant discovery, if we have two very economical wells 20 miles apart,” Henry said. “That meant it probably covered the whole area out there. We kept on drilling, and the wells kept on coming in good. So, we made a serious effort at leasing up everything we could find in this trend.”

Between 2005 and 2008, Henry Petroleum had leased 330,000 acres and continued drilling at a record pace. Since 2003, more than 3,000 wells have been drilled in the area, 900 of which were drilled by Henry Petroleum. As the price for leases skyrocketed, Henry realized that it was time to share his goldmine with the industry, having proved up a total of 400 MMboe and officially making the play economical.

Henry Petroleum sold all of its leases to Concho Resources in 2008. According to the Bureau of Economic Geology, considering total ultimate recovery of three billion bbl, Wolfberry is the largest discovery in the Permian basin in the last 50 years. “Right in the basin, we could get up to 2 million bpd,” Henry told The Dallas Morning News.

Henry didn’t wait long after selling Henry Petroleum. He soon founded Henry Resources, whose assets he sold to LINN Energy in 2010, although the company still operates four rigs in the Wolfberry. As more and more companies have moved in, to find and produce their share of the booming play, Henry believes it takes dedication and luck to get a trend going.“That’s what happens lots of times, when you start in on a play like this: you figure out how to do better,” Henry said. “We figured out how to do better at the start of the Wolfberry.”