Shale Oil In West Texas Has Firms On The Hunt For The Next Boom #engineering #onshore #technology #oilservicesequipment #projectmanagement

By 19th November 2015 Industry News No Comments

The Permian Basin in West Texas is the largest shale oil region and started the energy boom in the US. It is also the only place where production is increasing, regardless of what is considered the worst oil market since the 1980s.

This area, roughly the size of Syria, has supported US oil production ever since OPEC decided to pump more oil to maintain their market share and oil prices plummeted as a result. This has drawn the attention of several companies. “We’re already seeing a lot of people that are targeting the Permian. If you were to look for the most stable area today to do anything, it’s got to be there. Today you might even argue it’s more stable than Saudi Arabia.” Allen Gilmer, chief executive officer of Austin-based Drilling Info Inc., was quoted as saying during an interview in Houston. The now withdrawn bid by Anadarko for Apache last week is seen as inspired by Apache’s large holdings, about 3.2 million acres, in the Permian Basin. Exxon, which is the largest publicly traded energy company in the world, is meeting with small closely held producers and has already bought 48,000 acres in the Permian Basin through two deals in August.

The difference between the Permian Basin and other shale oil fields like Eagle Ford and Bakken are stark. Even though 59 percent of rigs have been idled, production is still expected to rise by 0.6 percent in December. In contrast, output in the Bakken has fallen by 12 percent and in Eagle Ford has dropped 25 percent. The Permian Basin has several layers of rocks, with each layer containing huge oil and gas reserves. One such layer, the Spraberry, is considered to hold about 75 billion barrels of recoverable oil. According to Laird Dyer, a Royal Dutch Shell Plc energy analyst, this would allow for rates of return between 30 and 40 percent, even with crude prices around $40 per barrel.

“Everyone recognizes that the Permian Basin is by far the richest land on earth. The only thing holding it back from more is the engineering, and I think this is an industry that’s really proven that the engineering gets better every year,” states Gilmer.

Will Giraud, chief commercial officer at Concho Resources Inc., recently told the crowd at the Hart Energy Executive Oil Conference in Midland, Texas that it is the last oil basin standing and about $50 billion in private-equity capital is funding about 80 management teams that have the Permian Basin as their focus. Concho Resources owns about 700,000 acres in the Permian and sees the basin as the last place one can obtain a material position that allows money to be made even in the current environment of low oil prices.