Permian Basin breaks record set in 1973 for oil production
Operators have pumped more barrels of oil out of West Texas’ prolific Permian Basin than ever before.It would not surprise me to see a new record in 2018. The Basin is a multilayer oil field where one well can hit several pay zones. The production costs in the Permian is competitive with most OPEC countries. The US would become more energy secure if its refinery capacity matched the oil being produced from these fields.
Permian production hit 815 million barrels in 2017, blowing past the previous record of 790 million barrels set in 1973, business research firm IHS Markit said on Tuesday.
“The magnitude of the rebound in Permian Basin liquids production is unprecedented,” analyst Reed Olmstead said in a report. “Not so long ago, many in the industry were saying the Permian was dead.”
In 1973, operators pumped an average of 2.16 million barrels of oil and gas liquids per day. Permian volumes this year will average 2.75 million barrels per day, IHS said, a rise of more than 25 percent or almost 600,000 barrels per day.
By the end of 2018, the Permian surge should push total U.S. liquids production to a new all-time high, 10.5 million barrels per day, Olmstead said.
“The implications for U.S. energy security are significant,” Olmstead said, “since we have become, in a relatively short period of time, more self-sufficient in terms of energy supply and are less reliant on imports.”
Operators began producing out of the Permian in the 1920s and have since pumped more than 39 billion barrels of oil there. Conventional oil production — vertical wells drilled into traditional reservoirs — declined steadily during the 1970s, ’80s, ’90s and early 2000s, before horizontal drilling and hydraulic fracturing remade the U.S. oil industry.
“When we consider the impact on the world’s crude markets, the Permian has to be considered a global disrupter,” Pete Stark, a research director at IHS, said in the report.
IHS energy researchers believe the basin still holds as much as 70 billion barrels of technically recoverable resources – about twice as much as the total oil production to date.