Enlarge GraphPosted on 09/20/2014 8:56:02 AM PDT by ckilmer
U.S. shale boom transformed U.S. energy markets
According to the U.S. Energy Information Administration (or EIA), the top seven unconventional oil plays accounted for 95% of domestic oil production growth. They also accounted for all domestic natural gas production growth during 2011–2013.
Permian Basin crude oil
According to the EIA, the Permian Basin in west Texas and eastern New Mexico is the largest crude oil-producing region in the U.S.
Crude oil production from the Permian Basin increased from 850,000 barrels per day (or bbl/d) in 2007 to 1.35 million barrels per day (or MMBbl/d) in 2013. This is an increase of ~60%.
The EIA estimates that the Permian Basin will produce more than 1.7 MMBbl/d of crude oil in September 2014.
The horizontal drilling and hydraulic fracturing application has unlocked huge oil reserves in the Permian. The most productive formations are the Spraberry, Wolfcamp, and Bone Spring.
The number of rigs in the Permian increased from an average of ~450 in 2011 to ~560 in August 2014—up by 24%.
According to the Railroad Commission of Texas (or RRC), historical production from the Permian Basin totaled ~29 billion barrels of oil and 75 billion cubic feet of gas—or ~70% oil by energy content. Most of the drilling activity there is oil-targeted.
Oil prices are more competitive than oil gas. This makes drilling oil more profitable.
Key stocks and exchange-traded funds (or ETFs)
The most active oil and gas producers in the Permian Basin are Chevron Corporation (CVX), Occidental Petroleum (OXY), EOG Resources (EOG), and Laredo Petroleum (LPI). Most of these companies are a part of the Energy Select Sector SPDR Fund (XLE).
In the next part of the series, we’ll discuss U.S. natural gas rigs and their production.
Check out our Energy & Power sector page for more interesting articles on the industry. Learn what’s been happening lately in the sector.
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Crude oil production from the Permian Basin increased from 850,000 barrels per day (or bbl/d) in 2007 to 1.35 million barrels per day (or MMBbl/d) in 2013. This is an increase of ~60%.
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that’s what the article says. now notice the production graph above. It looks very much like production at the end of 2014 will reach about 1.80 million Barrrels per day. That’s a gain of 450,000 barrels @ day in one year.
Also notice that the production increase slope is steepening and not flattening.
So there is no sign that the geology of the permian is putting any impediments on oil production growth despite that the permian deposits are not as beautiful/orderly as those in the eagle ford and baaken.
(Once again the wild card on production growth seems limited to the price of oil.)
The Sprayberry field was one of the most productive fields ever hit. They were fracking that field in the 1970’s and 80’s. Now with Horizontal drilling and fracking, it should make it even more productive.
Water for fracking is the largest limitation.
The average oil production per drilling rig in the Permian is half that of the Eagle Ford or the Bakken.
http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf
Thinking that the geology is no different is foolish.
Thinking that the geology is no different is foolish.
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Correct. However, you read more into it than I said. I didn’t say the geology of the permian is no different. All I said was that the the “permian deposits are not as beautiful/orderly as those in the eagle ford and baaken.”
And yet permian oil production is growing fast. To your point at least part of the reason for the fast growth is the sheer number of rigs in the Permian.
It helps, in my opinion, that the Permian basin is a long time area for oil production. Many areas did not require new leases, oil wells with minimal production kept old leases in force. For other areas, oil wells are not new idea and much of the people there are used to the idea. Lots of infrastructure still in place. That, combined with a large areas has made it easier for the number of rigs come in, or back in, for servicing the area.
All good. It looks like the 2013 increase was roughly 200,000 barrels @ day. The increase for 2014 looks like it will come in at roughly 450,000 barrels a day where every month in 2014 sees a higher production increase than the last.
That steepening increased production rate has to show signs of flattening before anyone can predict that the Permian increases will top out or even slow down any time soon.
As it is, this kind of production growth suggests that Permian can produce close to 1 million barrels a day increase in production in 2015 just as eagle ford and the baaken production increases start to slow down.
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