Last year alone the Permians production rose by a million barrels a day.
Texas Insider Report: AUSTIN Texas Things like horizontal drilling and fracturing the shale revolution oil derricks that dot the landscape all throughout the Permian Basin new drilling technology and greater energy output are transforming American life and lives all around the world said Secretary of State Mike Pompeo recently.
Just two months after the New York Times reported that Texas and New Mexicos Permian Basin could surpass Saudi Arabias Ghawar oilfield to become the highest producing oilfield in the world in the next three years data released this week provides a new take: It already has.
The Permian as vast as South Dakota is distinct from other shale fields because of its enormous size and thickness of its multiple shale layers some as fat as 1000 feet as well as its proximity to refineries on the Gulf of Mexico. The Permian is rich in oil and its shales are relatively easy to tap with todays rigs.
Now we know the Permian basin is now the most productive oil field in the world.
As Bloomberg explains
The new maximum production rate for the Ghawar oil filed in Saudia Arabia 3.8 million barrels a day means that the Permian in the U.S. which pumped 4.1 million barrels a day last month according to government data is already the largest oil production basin.
The comparison isnt exact the Saudi field is a conventional reservoir while the Permian is an unconventional shale formation yet it shows the shifting balance of power in the market."
The most recent Energy Information Administration (EIA) drilling productivity report shows the Permian produced 4.1 million barrels of oil per day in March and will come close to 4.2 million barrels per day in April.
And as the February New York Times article noted the Permians incredible growth potential has already been demonstrated:
Last year alone the Permians production rose by a million barrels a day… Now producing four million barrels a day the Permian generates more oil than any of the 14 members of OPEC except Saudi Arabia and Iraq."
The United States is already the worlds top oil and natural gas producer and as U.S. Secretary of State Mike Pompeo said recently:
New drilling technology and greater energy output are transforming American life and lives all around the world in the same way that the changes did when Spindletop first took place back in 1901.
It was a game-changer and what this industry is doing today is game-changing as well."
Permian production has quadrupled over the last eight years in contrast with the decline of most other established oil fields for several reasons.
Companies found ways to lower exploration and production costs in tapping the Permians accommodating shale. New technologies for drilling and hydraulic fracturing helped bring the break-even price for the best wells from over $60 a barrel to as low as $33.
Today the biggest risk at least for producers is that too much output might drive down prices too much and jeopardize their profitability. They could also prompt another round of aggressive actions from OPEC and its new ally Russia.
If U.S. production grows another two million barrels a day we could take market share but how long would OPEC allow that to happen?" said Scott D. Sheffield chairman of Pioneer Natural Resources a major Permian producer.
You could have another price war."
As many as 15 oil and gas pipelines serving the Permian Basin are expected to be completed by the middle of 2020 potentially increasing exports from the Gulf of Mexico four-fold to eight million barrels a day after 2021 according to a recent Morningstar Commodities Research report.
