Permian Basin

Ultimate Guide for Permian News, Information, Facts & Statistics

Permian Basin Overview

The Permian Basin is renowned for vast oil and gas reserves and record-breaking daily production levels that established the United States as the largest producer in the world.  The following sections provide details about the Permian Basin’s production capacity, major geological structures, market activity, and most recent news.

What is the Permian Basin?

 

The Permian Basin takes its name from the Permian geologic timeframe approximately 251 to 291 million years ago. The United States Shale Revolution that has triggered record oil and gas production would not have been possible without the vast prehistoric sea that dominated the region during this period, which deposited rich organic material over millions of years to form one of the thickest hydrocarbon structures in the world.  The Permian Basin is not uniform, with deeper zones of sedimentary rock forming the Midland and Delaware Basins and the shallower Central Basin Platform forming a bridge between whose prehistoric reefs were ideal for trapping large oil deposits.

The Permian Basin is one of the oldest and most well-known hydrocarbon-producing areas. Since the first well drilled in the basin in July of 1920, over 30 billion barrels of crude have been recovered, with experts predicting there are at least 20 billion barrels remaining. Production hit a peak in the early 1970s due to the Arab oil embargo before steadily declining to a low after the 2008 recession.

However, new technology that was introduced in the era of high prices in the late 2000s and early 2010s has led to a boom in this historic basin.

Earlier production drew primarily from vertical wells drilled in shallower zones like the Grayburg, San Andreas, and Clear Fork. With oil recoverable from areas as shallow as hundreds of feet below the surface to as deep as five miles, companies today are drilling horizontal wells and employing techniques like horizontal drilling, larger fracs, and downspacing to increase production.

Driving down the dusty roads of West Texas or Southwest New Mexico today, the few sightseers who make the journey will encounter a steady stream of trucks as they pass by fields dotted with pumpjacks.  Entering Midland, Texas, travelers are often greeted by long rows of drilling rigs ready to deploy to the near 86,000 square miles that comprise the surface acreage of the Permian Basin.  Traffic in and around Midland, Odessa, and San Angelo, where most drilling and production operations are coordinated, is intense, carrying everything from crews and equipment to the water and sand needed for hydraulic fracturing.

Permian Basin

What Natural Resources are in the Permian Basin? 

In addition to oil and gas, Permian Basin wells produce large volumes of salt water, making water disposal a sibling industry and adding to the traffic as haulers truck salt water to injection wells across the basin.  Produced water is also increasingly transported by pipeline to recycling facilities for use in hydraulic fracturing and irrigation.

Other natural resources in the Permian Basin include major sylvite formations that yield a steady source of potassium salts, also known as potash.  Rock salt is a byproduct of potash mining.

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How Much Oil is Left in the Permian Basin? 

The stacked pay zones of the Permian Basin promise steady output for decades to come.

Like a wedding cake, hydrocarbon rich formations cut across the basin, including the Wolfcamp Shale, Spraberry Trend, and Bone Spring Play.  The basin’s proven, technically recoverable reserves in the Wolfcamp and Bone Spring Play formations alone are estimated at 50 billion barrels of crude and nearly 300 trillion cubic feet of natural gas (source: USGS).  How much oil is left in the Permian Basin is also governed by economics with higher commodity prices creating incentive for producers to extract previously uneconomic oil reserves.

Permian Basin

Permian Basin Oil Production

Oil and gas have been continuously produced in the Permian Basin for a century starting with the first well drilled on the eastern section of the basin in Mitchell County.  For much of its history, Permian Basin oil production has relied on drilling shallow formations just a few thousand feet below the surface using vertical wells.

Unconventional horizontal drilling and longer lateral wellbores have boosted Permian Basin oil production with the Permian Basin now accounting for almost half of US production at the beginning of 2020 at 4 million barrels of oil per day.  It is estimated that approximately 30 billion barrels of oil and 75 trillion cubic feet of natural gas of been produced from Permian wells since the 1920s.

Permian Basin

Permian Basin Oil Boom

The Permian Basin has experienced multiple booms and downturns throughout its history.  The first well drilled in the Spraberry Trend in West Texas is believed to have triggered the Permian Basin oil boom of the 1950s, however this target was not ready to be fully exploited until the advent of horizontal drilling.

The venerable basin had a massive resurgence in 2011 with the widescale use of new horizontal drilling and hydraulic fracturing techniques that unlocked the Permian Basin’s massive production potential.  These drilling and completion techniques now enable wells to be guided horizontally at deeper depths along producing reservoirs, or pay zones, using directional drilling and enable previously unrecoverable oil to be extracted from tight shale formations.

The latest Permian Basin oil boom was the epicenter of the Shale Revolution, which triggered unconventional drilling across US shale plays.

Permian Basin

Permian Basin Sub-Basins

Covering 86,000 miles and 52 counties across southeastern New Mexico and western Texas, the Permian Basin is made up of three subsidiary basins: the Delaware, Midland, and Central Basin Platform.

Permian Basin

The Delaware Basin

Located on the western section of the Permian, the Delaware Basin covers a 6.4M acre area, stretching from Eddy county, NM to Pecos county, TX. The Delaware is the deepest of the Permian sub-basins with the thickest deposits of rock. Historically, production focused on vertical development and targeted the Wolfcamp and the Abo/Yeso formations in the Northwest Shelf. The introduction of horizontal drilling, however, has revitalized interest in the Wolfcamp and introduced the Bone Springs as the money-making formations of the Delaware.

  • Location: Western sub-basin spanning West Texas and SE New Mexico
  • Primarily unconventional targets
Permian Basin

The Midland Basin

The Midland Basin is in the eastern part of the Permian. It stretches north to south from southern Lamb and Hale counties to northern Crockett county. The Midland has been a hotspot for vertical drilling since the 1940s, though activity took-off in the 1970’s. Previously, the Spraberry was the targeted formation, but with technological advances that allow companies to drill longer horizontals and frac more effectively, the Wolfcamp has become the primary target.

  • Location: Eastern sub-basin.
  • Primarily unconventional targets
Permian Basin

The Central Basin Platform

The Central Basin Platform sits in the heart of the Permian, between the Delaware and Midland. Primarily vertical wells have been drilled in the CBP related to some of the oldest Permian basin finds. An area of low well costs and consistent returns, this basin has become known as a low-risk, high-reward area to drill. Operators are now looking to bring the latest horizontal drilling and completion technologies to this area. With its long history of production, roughly 45% of the total barrels produced to-date in the Permian have come from the CBP.

  • Location: A shallow subsurface structure separating the Delaware and Midland basins.
  • Primarily conventional targets
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Permian Basin

What is the Delaware Basin?

The Delaware Basin extends from Lea and Eddie counties, NM, in the north down to Pecos County, TX, in the south. The basin’s areal extent covers 13,000 square miles, most of which is sparsely populated. The northern end of the basin lies in New Mexico, giving it exposure to federal land which typically carries a lower royalty rate compared the private leases in Texas and some regions of New Mexico.

Additionally, a potash mining area is located on the basin’s northern end, restricting surface access and thereby complicating access to oil and gas minerals on designated lands.

The basin dips towards the Central Basin Platform (CBP) which serves as its eastern boundary. Structural deformation post-deposition and hydrocarbon generation created an inverted relationship between depth and thermal maturity in the basin compared other unconventional plays, making the eastern side deeper and overpressured yet oilier. On the shallower, more thermally mature western side of the basin, API oil gravity from the Wolfcamp can reach 55°, much higher the 40-45° in most of the Permian. The basin is heavily faulted, creating a complex network of natural fractures that pose geologic risks for operators in the affected regions. Primary targets in the basin are the organic-rich units within the Wolfcamp and Bone Spring groups, with the latter having more localized, turbidity-driven deposition.

Horizontal development unleashed an enormous amount of production from the basin, growing it from ~80 Mbbl/d at the beginning of 2010 to  over 2.1 MMbbl/d a decade later. While the basin has shown great potential in terms of resource and economics, the basin’s structural complexities have led to a wide disparity in results across the play, much of which is driven by parent-child well interactions both within and across landing zones.

Permian Basin

What is the Midland Basin?

The Midland Basin spans roughly 14,000 square miles, extending from Lynn County, TX, in the north down to Crockett County, TX. The Midland-Odessa metropolitan area, the most populous in the Permian Basin region, sits atop the core of the Midland Basin and is home to about 340,000 people (ACS, 2018).

The Midland can be thought of as a mirror image of the Delaware, dipping towards the west where it is bounded by the CBP.

In the east, the basin transitions to the Eastern Shelf, another platform carbonate feature where conventional resource has been extensively exploited. The basin is shallower and less overpressured compared to the Delaware, even along its axis, and is not as pervasively faulted as its western analogue. Similar to the Delaware, historical development focused on shallower detrital sandstone and carbonate targets sourced from the basin’s peripheral features and deposited during Early Permian Epoch, referred to as the Spraberry group in the Midland.

Modern development in the basin is focused on the organic-rich units within the Wolfcamp and Spraberry groups. Historical vertical wells, many of which commingled the Spraberry and Wolfcamp, formed the majority of the basin’s production base until 2012 when horizontal drilling sent output hurtling from ~350 Mbbl/d to ~1.9 MMbbl/d at the beginning of 2020. While the basin’s path to modern unconventional development was paved by operators in the shallower southern end of the basin, rapidly increasing gas-oil-ratios characteristic of the area have made the area unfavorable economically compared to the deeper, oilier northern end of the basin where most current activity is located.

Permian Basin

What is the Central Basin Platform?

The Central Basin Platform is in many ways the backbone of the Permian Basin.

On top of being a shallow carbonate structure that divides the two sub-basins, it served as the driver of Permian oil production for most of the region’s history – the Platform is responsible for over 90% of the oil recovered from the Permian Basin to date.

While not as aerially extensive as the Midland or Delaware at 6,400 square miles, migrated oil from the basins charged the shallow carbonate reservoirs to create prolific, albeit localized, conventional fields along the Platform’s edges, many of which have transitioned to secondary and tertiary recovery.

Primary target formations include the San Andres, Clear Fork, Tubb, Devonian and Grayburg. Most operators on the Central Basin Platform are small, privately held companies.

What is Stacked Pay?

Arguably the Permian Basin’s defining characteristic is its stacked pay. While this quality is not exclusive to the Permian, its magnitude of stacked pay is considerably greater than what is seen in most other unconventional plays in North American. To provide context, the thickness of the hydrocarbon column being currently developed is over 2,000 feet in the Midland and Delaware basins, compared to 300 feet and 500 feet in the Williston Basin in North Dakota and Eagle Ford trend in South Texas.

In essence, the term stacked pay refers to the number of commercially viable landing zones that are available on a single surface location.

While the resource potential of the Permian Basin’s stacked pay is undeniable, development of this resource is challenging in practice as flow barriers between zones are not always present. As many operators have prioritized development of their most productive landing zones, sub-optimal resource recovery of the commercial hydrocarbon column is observed throughout the basin due to parent-child well dynamics.

Permian Basin

What are the Major Permian Basin Formations?

The Permian Basin is comprised of dozens of major and minor hydrocarbon-bearing formations that vary widely in terms of depth, depositional history, rock type, and hydrocarbon content.  The following sections briefly describe major Permian Basin formations.

Wolfcamp Shale

The Wolfcamp formations of the Permian Basin represent a time of rapid sediment deposition into the basin when it was at it’s deepest.

The Wolfcamp is primarily characterized by thick, organic rich shales, with varying amounts of siliciclastic and carbonate influence, in response to sea level fluctuations over millions of years.

In the Delaware, the Wolfcamp section is over 2,000’ thick, from the D at the base, through the C, B, A and XY at the top.

Wolfcamp XY

The Wolfcamp XY is not present across the entire basin, but is constrained to the north-central region of the Delaware, is approximately 250’ at it’s maximum thickness and is characterized by a distinct sequence of two alternating sand and shale packages.

Wolfcamp A and B

The Wolfcamp A and B are characterized by a highly organic rich and resource dense shales, and are the most targeted intervals in the Permian.

Wolfcamp C and D

The Wolfcamp C and D are less prospective targets than the Upper Wolfcamp, though combined are over 1,000’ thick.

Permian Basin
Permian Basin

Spraberry Play of the Midland Basin

The Lower Spraberry

The Lower Spraberry formation is the most targeted of the Spraberry intervals and is characterized by carbonate and shale and layers.

In 2007 the US Department of Energy ranked the Spraberry Trend the third largest oilfield in the nation with proved reserves of 10 billion barrels of oil.

The targeted formations extend approximately 150 miles long by 70 miles wide, though is the most prospective in Midland, Martin, and Howard Counties.

The Middle Spraberry

The Middle Spraberry is an emerging target with similar geologic characteristics to the Lower Spraberry, though is shallower stratigraphically, and is separated from the Lower Spraberry by the Jo Mill. The Upper Spraberry is the least proven.

Permian Basin

Bone Spring Play of the Delaware Basin

The Bone Spring Play is a thick package of alternating sands, shales and carbonate intervals in the Delaware Basin, though is primarily targeted in Eddy & Lea counties in New Mexico. The Bone Spring formations overlie the Wolfcamp Shale.

The Second and Third Bone Spring Sands are the most targeted, due to their high-quality reservoir characteristics.

Conventional vertical drilling initiated development of these zones, however, horizontal drilling has expanded the play. The complex submarine channel depositional environment of these formations adds complexity to optimizing the reservoir target across the basin. The carbonate and shale intervals between the sands are more recently being assessed and proven out for their economic resource potential.

Permian Basin

Historical and Emerging Targets in the Permian Basin

  • Alpine High: Located in the SW corner of the Delaware on a structural high. Primary targets are the Barnett and Woodford shales which tend to be gas-prone with minimal wellhead liquids.
  • Avalon/Leonard: Primarily carbonates in Northern Delaware with interbedded shales that are typically less economic than the primary targets of the Delaware, though the oily Avalon trend in the Stateline region has shown strong potential.
  • Delaware Mountain Group: Historical conventional vertical target characterized by thick, shallow sands; now being used as water source and disposal unit.
  • Yeso Trend: Sitting just north of the Delaware Basin along the Northwest Shelf where primary targets include porous carbonates such as the Blinebry and Paddock. Historically developed as conventional oil pools with vertical wells, the play is seeing renewed interest through horizontal development.
  • San Andres: New horizontal drilling on the CBP targeting the San Andres residual oil zones (ROZ) near prolific historical fields.
  • Oil-prone Mississippian-Devonian: An exploratory play along the western and eastern flanks of the CBP where the Barnett, Meramec and Woodford are oil prone but deep and structurally complex with a high degree of faulting and erosion.
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Permian Basin Rig Count

Rotary drilling rigs are in continuous operation day and night across the Permian Basin.  The number of rigs active often reflect oil pricing with rigs “laid down” with lower oil prices.  Within the last year Permian rig count was as high as 486 with a record low of 300.

Permian Basin Oil Companies

The Permian Basin has attracted significant attention and investment from all the supermajors except Total, including Chevron, ExxonMobil, Shell, BP, and ConocoPhillips.  However, Permian Basin oil companies represent many more medium and smaller independent producers, accounting for 80% of Permian output.  At the beginning of 2020 there were nearly 400 operators in the Permian Basin with strongest production from EOG Resources.

In the last decade, the Shale Revolution led to the creation of many non-operating oil companies and “drillcos” who acquire mineral interests in Permian acreage and help offset drilling costs for operating Permian Basin oil companies.

The following table lists the top Permian Basin oil companies according to the Texas Railroad Commission’s 2019 report.

Operator 12 Month Production (Bbl) Daily Average Production (Bbl)
EOG Resources 105,167,616 288,130
Pioneer Natural Resources 88,400,474 242,193
COG Operating 63,731,885 174,608
Diamondback E&P 53,007,815 145,227
XTO Energy 41,530,685 113,783
Burlington Resources 40,875,423 111,987
Chesapeake Operating 38,248,224 104,790
Marathon Oil 32,879,564 90,081
Occidental Permian 32,410,759 88,797
Encana 32,110,434 87,974
Apache Corporation 31,486,474 86,264
Anadarko 25,822,808 70,747
Chevron 24,794,174 67,929
Parsley Energy 24,181,967 66,252
Devon Energy 23,507,327 64,404
Shell 21,869,175 59,916
Kinder Morgan 19,964,634 54,698
SM Energy 19,762,905 54,145
Endeavor Energy 18,807,348 51,527

Counties of the Permian Basin

The Permian Basin spans an area approximately 300 miles in length and 250 miles wide in west Texas and southeastern New Mexico.  The surface acreage of the basin encompasses more than 50 counties in this region whose population is approximately half a million residents.

The following table lists the top counties of the Permian Basin by population size.

County State Population Land Area (Miles) Land Area (Kilometers) Surface Water
Midland County Texas 176,832 902 square miles 1,452 km2 0.28%
Ector County Texas 134,165 902 square miles 1,452 km2 0.50%
Lea County New Mexico 60,232 4,394 square miles 7,071 km2 0.07%
Eddy County New Mexico 52,706 4,198 square miles 6,756 km2 0.50%
Howard County Texas 32,940 904 square miles 1,455 km2 0.40%
Pecos County Texas 16,248 4,765 square miles 7,669 km2 0.02%
Gaines County Texas 15,382 1,503 square miles 2,419 km2 0.03%
Andrews County Texas 14,057 1,501 square miles 2,416 km2 0.02%
Dawson County Texas 13,657 902 square miles 1,452 km2 0.20%
Reeves County Texas 11,046 2,642 square miles 4,252 km2 0.30%
Ward County Texas 10,528 836 square miles 1,345 km2 0.03%
Yoakum County Texas 7,698 800 square miles 1,287 km2 0.01%
Winkler County Texas 6,772 841 square miles 1,353 km2 0.02%
Martin County Texas 4,581 916 square miles 1,474 km2 0.08%
Crane County Texas 4,165 786 square miles 1,265 km2 0.08%
Upton County Texas 3,130 1,242 square miles 1,999 km2 0.01%
Glasscock County Texas 1,406 901 square miles 1,450 km2 0.10%
Terrell County Texas 969 2,358 square miles 3,795 km2 0.01%
Borden County Texas 525 906 square miles 1,458 km2 1.00%
Loving County Texas 113 677 square miles 1,090 km2 1.10%

Cities of the Permian Basin

The cities of the Permian Basin support a rapidly growing reginal economy that spans west Texas and southeastern New Mexico.  These cites support a large oil & gas workforce, including drilling and production operations, myriad support services, and an extensive supply chain.

The following table lists the top cities of the Permian Basin by population size.

City State County Population Land Area (Miles) Land Area (Kilometers)
Midland Texas Midland County 146,038 71.5 square miles 115.07 square kilometers
Odessa Texas Ector County 99,940 44 square miles 70.81 square kilometers
Hobbs New Mexico Lea County 34,122 26.44 square miles 42.55 square kilometers
Big Spring Texas Howard County 27,282 19 square miles 30.58 square kilometers
Carlsbad New Mexico Eddy County 26,138 28.2 square miles 45.38 square kilometers
Andrews Texas Andrews County 11,088 6.9 square miles 11.10 square kilometers
Lamesa Texas Dawson County 9,422 5 square miles 8.05 square kilometers
Pecos Texas Pecos County 8,780 7.3 square miles 11.75 square kilometers
Fort Stockton Texas Pecos County 8,283 5.1 square miles 8.21 square kilometers
Monahan’s Texas Ward County 6,953 22.4 square miles 36.05 square kilometers

Pipelines of the Permian Basin

The Permian Basin is crisscrossed with an extensive system of gathering and transportation pipelines.  As midstream companies catch up with record oil, gas, and NGL output, the region is undergoing extensive infrastructure built out to improve take away capacity from the basin.  Pipelines of the Permian Basin include crude oil, natural gas, and NGL pipelines.  Areas of the basin, especially the Delaware Basin, with high produced water output are also seeing increased pipeline projects dedicated to moving saltwater to disposal wells and recycling facilities for use in hydraulic fracturing and irrigation.

Permian Basin
Pipeline Operator Commodity Destination
Permian Highway KMI Natural Gas Gulf Coast
Longhorn MMP Crude Oil Gulf Coast
West Texas Gulf ET Crude Oil Gulf Coast
Centurion Lotus Midstream Crude Oil Cushing
Bridgetex MMP Crude Oil Gulf Coast
Cactus System PAA Crude Oil Gulf Coast
Permian Express System ET Crude Oil Gulf Coast
Midland to ECHO System EPD Crude Oil Gulf Coast
EPIC Crude EPIC Midstream Crude Oil Gulf Coast
Gray Oak Pipeline PSX Crude Oil Gulf Coast
Wink to Webster XOM+PAA Crude Oil Gulf Coast
Seminole Blue ET NGL Gulf Coast
Line EZ CP Chem NGL Gulf Coast
Grand Prix TRGP NGL Gulf Coast
West Texas LPG OKE NGL Gulf Coast
Sand Hills PSX/DCP NGL Gulf Coast
Lone Star Express ET NGL Gulf Coast
Shin Oak EPD NGL Gulf Coast
EPIC NGL EPIC Midstream NGL Gulf Coast
NGPL KMI Natural Gas Midcon/Midwest
Transwestern Pipeline ETP Natural Gas  Desert Southwest
Northern Natural Gas BRK.A Natural Gas Midcon/Midwest
El Paso Natural Gas KMI Natural Gas Desert Southwest
Atmos Energy ATO Natural Gas Central/East Texas
ET Fuel ETP Natural Gas Central/East Texas
Enterprise Intrastate EPD Natural Gas Central Texas/Gulf Coast
Kinder Morgan Texas Pipeline KMI Natural Gas Gulf Coast
Oasis ETP Natural Gas Central Texas/Gulf Coast
Old Ocean Pipeline EPD/ETP Natural Gas Central/East Texas
Gulf Coast Express KMI Natural Gas Gulf Coast
PHP KMI  Natural Gas Gulf Coast
Whistler MPLX Natural Gas Gulf Coast
Commanche ETP Natural Gas Mexico
Roadrunner OKE Natural Gas Mexico
Trans Pecos ETP Natural Gas Mexico