Whenever there is a conversation about oil, the first thing that used to comes to one’s mind is OPEC. There is no doubt that the countries in OPEC are rich in oil, and also the major exporters of this energy. However, the recent developments in the oil and gas industry in the US are changing things. The Permian Basin is giving the US the edge that it has not had over the major oil producing countries for nearly half a century now. The oil production is going up, efficiencies are getting better, and companies are more interested in setting up their operations in the region than ever before.

The US Is becoming Stronger as an Oil Producer

There is no doubt about the fact that shale oil production technology has improved greatly over the course of time. For that particular reason, Permian Basin has proved to be quite a treasure for the US economy.  On any given day, there is a production of more than 11 million barrels of oil in the US. From those 11 million barrels, nearly eight million are a result of shale oil production.

According to the experts in the industry, shale oil production is everything for the US right now. Had there been no shale oil production in the country, the price of the barrel would not have been anything less than $200. Pioneer Natural Resources chairman, Scott Sheffield, says that there were already predictions of such a time floating in the air nearly five years ago. According to him, his company had already predicted that the Permian Basin was going to make the US one of the major oil producers of the world in the coming times.

Go back five years and shale was responsible for only 1.3 million barrels of oil. But that’s not the most interesting part. What’s even more surprising is the fact that this production will increase even more in the coming years. At the peak of its production, Permian could produce as much as nine million oil barrels every single day.

Things Are Looking Great for Permian

The growth of oil production in the Permian Basin has definitely attracted many new players into the region. Companies are benefitting more from increased efficiency rather than increased expenditures with both Frac technology and drilling technology and techniques improving year by year.

Nearly 60% of all the rigs in the US are in the Permian. If you take into account the total number of rigs around the world, the 436 rigs in Permian are roughly 25% of that.

In a world where your natural resources and economic conditions can decide how strong your country is, Permian Basin has definitely helped in making the US the superpower that it claims to be.

QEP are focusing their efforts on Permian production. In the second quarter, the company saw its oil production at more than 6.5 million bbl. The oil production from Permian Basin only also saw an increase of more than one million bbl.

When you look at the independent entities, they have been increasing their capital expenditure in the Permian. From the recent statistics, there has been an eight percent increase in their expenditure.This increase will only give them a boost of 1.4% increase in their production in 2018 but more when the DUC count comes down during 2019.

Companies like QEP are focused on efficiency. QEP has worked hard to reach a point where its drilling time has gone down by nearly 72 hours on an average. By doing this, the company has saved nearly $400,000 on every single well in the middle of 2018.

The Only Challenge for Companies

Both QEP and Pioneer Natural Resources are planning to focus their efforts on Permian production. Even ExxonMobil seem to be taking that stand. The big challenge for the companies right now is the bottlenecks in the oil pipeline infrastructure. However, the plans are in place to remove these bottlenecks in the coming year. Companies now know that the pipeline shortage is going away pretty soon. In the coming year, there are three projects that will focus on adding more pipelines in the basin. All these projects are expected to be completed in 2019. That’s when many small companies will also move back into the region and the thousands of DUC wells will start to come back online.

Final Thoughts

The Permian basin is certainly the most prolific unconventional basin in USA. The focus on this area is bringing in the IOC’s and large independents in a way that has not been seen before. 2019 will bring greater pipeline capacity and that will bring in the fracking crews to bring DUC wells online. How quickly that will happen will depend on the capability of the Oilfield to satisfy demend. The boom and bust era has not gone away, if anything the cycles have become more compressed which is a big challenge for a capital and human intensive industry.

If you are someone interested in more oil and gas industry news and information, you can follow oiltechconnect.com.