Permian Basin is reshaping the world oil supply and not just in Texas

Time:

How an Oil Boom in West Texas Is Reshaping the World

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The power of the Permian oil and gas boom is easy to spot in the basin itself, which stretches across more than 75,000 sq. mi. of scrubby ranchland in West Texas and New Mexico. So-called man camps–hastily constructed short-term housing for oil-field workers–have sprung up everywhere, amid new luxury construction projects and shiny billboards advertising Rolexes to laborers pulling in six-figure salaries. But the impact extends far beyond the region.

During the past three years, the boom in these parts has transformed the U.S. economy, upended the international energy industry, undermined global environmental efforts and tilted the balance of power among Beijing, Moscow and Washington. In places like Saudi Arabia, uncertainty over future oil profits driven by rising U.S. production contributed to a rethinking of the economy. In theory, less reliance on Saudi oil also gives the U.S. more leverage in other areas, like the war in Yemen, although the Trump Administration hasn’t prioritized such efforts. The vast new U.S. oil reserves have provided cover for the imposition of tough sanctions against nations like Iran and Venezuela, moves that at other times might have crippled global supply. And around the world, the boom in the U.S. has inspired other countries to race to develop their own shale resources. “In a shale revolution world, no country is an island,” says Fatih Birol, who leads the IEA. “Everyone will be affected.”
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While previous oil booms have ended in busts that devastated the region, local officials say this time is different. In the past, high oil prices fueled short-lived enthusiasm that dwindled when the price of crude dropped. But recently, drillers have flocked to the Permian despite low oil prices, in part because fracking and other technological advances have made extraction so cheap. Drillers strike crude in areas inaccessible just years ago. “We’re not looking for hydrocarbons, because the hydrocarbons are there,” says Vicki Hollub, CEO of Occidental Petroleum. “The Permian will continue for many years to come.” A report from the Federal Reserve Bank of Dallas estimates that new Permian oil wells break even around $50 a barrel–far less than the $80 that Saudi Arabia spends on average, according to the International Monetary Fund, to extract the same quantity of crude. “We don’t use the B word,” says Bobby Burns, president of the Midland Chamber of Commerce. “Boom doesn’t really describe it.” The Permian, he says, will be a force for a generation.
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One of the biggest mistakes OPEC made in response to the shale wells was attempting to put them out of business with predatory pricing.  The shale producers got much more efficient and now can produce oil for less than most OPEC countries.  It will only get worse for OPEC once the infrastructure is in place to get the Permian oil to market and to export terminal.s