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... The USGS said Wednesday it found 28.3 trillion cubic feet of gas and 1.6 billion barrels of oil in the Woodford and Barnett shale formations, part of the larger Permian Basin, which straddles West Texas and New Mexico.

The USGS began assessing available petroleum reserves 50 years ago after the Arab oil embargo sent the U.S. into a supply crisis. Domestic oil supplies have exploded since then, especially after fracking ushered in the shale boom in the early 2000s, turning the U.S. into an oil-producing powerhouse. ...

The potential in the area is "massive," Larson said, but producing these newfound reserves presents new challenges. Larson said he has been studying the area as it is increasingly of interest to the companies involved in his research consortium.

The reserves are deeper than the formations where oil companies traditionally drill. It's also hotter, meaning there will be more associated gas. Both the depth and the additional gas pose cost challenges to oil and gas producers.

Additionally, in the Barnett, there's more clay, posing drilling hazards.

"And then the other complexity is just really trying to identify the sort of sweet spots," Larson said. "Where across the Permian Basin is the Woodford most likely going to produce oil? And so I think that's what makes the Woodford still an exploration target."

Flagging oil prices don't help these exploration efforts, Larson said. But if the price signals change and oil companies increase drilling efforts, the Woodford and Barnett present an untapped opportunity. ...