The Permian Basin is never not interesting. It continues to be the largest play in North America, showing production growth in spite of steep declines in the number of active rigs and the advent of “Drilled but Uncompleted Wells” (DUCs) that has been brought on by the current downturn in the price of oil.
One advantage brought on by the industry slowdown is that the network of pipelines feeding out from the basin has now had a chance to catch up with actual production. Previously Permian Basin oil was selling at a slight discount to WTI to account for the bottleneck in getting it all to market.
Also, ExxonMobil has just announced new plans for the Permian.
So, with that as a starting point, lets fire up the Drillinginfo tool set and take a peek at Permian Basin activity!
RigsThe Rig Count is still being bandied about as a proxy for future oil production growth, in spite of the many factors and productivity gains brought on by the unconventional revolution. (Drillinginfo’s solution to the problem of predicting future production capacity is encapsulated in our Drillinginfo Index). Nonetheless, one of the first things we think of when we think oilfield activity is rigs, so lets start by taking a look at rig activity within the Permian Basin.
One of the problems with straight line rig count, is that the newer rigs have much higher horsepower, so they can drill deeper and drill faster. The attrition in the Oil and Gas fields has largely been of the lower horsepower rigs. This graph of basin rig activity clearly shows an abundance of higher horsepower activity.
Looking at the last three months, but now checking vertical vs. horizontal activity, on the upper left we see a smattering of vertical activity throughout the heart of the Permian Basin, with a slight favor towards the eastern Midland Basin portion of the play. The image down to the right shows horizontal activity, and we see a clear concentration of horizontal activity in the Delaware Basin portion.
Looking at the 18 month production curve across all operators in the play for the past few years. Using the financially-oriented 20:1 MBOE to account for gas and oil, we some very clear improvement in efficiency, not just on the initial phase, but throughout the first 18 months.
And a quick look at the oil/gas ratios (using BTU based 6:1 MBOE), we see both the Delaware and the Midland Basin are producing roughly 60% oil to 40% gas, but check out those booming per-well numbers from the (heavily-horizontal) Delaware Basin!
If we look at permits in the Permian basin for 1H2014 we see 4412 permits filed, while for 1H2015 we see 2339, a decrease of 47%.
Here’s a graph of permits for the past 5 years, permits are down steeply this year, but at approximately 2010 levels.
The Permian Basin continues to be an amazing resource for the energy security of the USA, and operator innovation and infrastructure commitment are two of the key factors.
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