Lengthy, well written article worth reading in its entirety.
Posted on 04/19/2018 11:39:00 AM PDT by CedarDave
Hundreds of small, independent producers might soon be swallowed up by today’s unprecedented oil and gas boom in southeastern New Mexico.
As industry titans like ExxonMobil and Concho Resources pump billions of dollars into previously untapped sections of New Mexico’s century-old oil patch, the state’s small- and medium-sized producers are struggling on the margins to keep running aging wells based on outdated technology. Those companies, which have flourished for decades in New Mexico’s side of the Permian Basin, don’t have the resources to invest in the modern drilling technology needed to dig into the oil-rich, hard shale-rock formations where the majors are now concentrated.
Local government officials and economic development professionals say the flood of investment pouring in from the major players will easily make up for economic losses from the decline in traditional, or legacy operations that fueled past booms.
And with the new oil boom gaining momentum, unemployment from the last four years of industry downturn is rapidly declining as workers find jobs in the Delaware. In addition, a new industry layer of “mid-stream” services to gather and process oil and gas after its pumped to the surface is cropping up for the first time on New Mexico’s side of the Permian after remaining glued to the Texas side for decades.
Companies are laying thousands of miles of new pipeline for oil, natural gas and water transport in the Delaware Basin near Jal.
All those changes reflect a tectonic shift in the state’s oil patch, as the old technology of drilling vertically into soft sandstone formations gives way to the modern techniques of hydraulic fracturing and horizontal drilling that’s opened up vast pools of hydrocarbons trapped in hard shale-rock.
(Excerpt) Read more at abqjournal.com ...
Lengthy, well written article worth reading in its entirety.
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My dad and uncles helped drill quite a few of those legacy wells. We lived in Roswell. They drilled the Delaware basin for years. Crude and lots of natural gas.
The small guys were making a little money at $40-45. At $68, I don’t think they will go broke with their outdated, inefficient equipment on the old wells.
Of course not.
They won’t be able to compete for new wells, but...
Old technology replaced by new: this is hardly news.
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