Category — U.S. Hydrocarbon Boom
“The Permian Basin is a story about combining the various talents of independents, majors, and service companies in using advancing technologies to sustain the lifespan of existing fields, to tap into zones that were previously uneconomic or inaccessible, and to increase the Permian’s proven reserves in a remarkable fashion.”
The Permian region, in western Texas and extending into southeastern New Mexico, has been one of North America’s major oil and natural gas producing regions for nearly a century. What makes the Permian stand out, besides its size, is its huge diversity. Rather than a single play, it is a collection of regional conventional and unconventional plays, producing from a variety of geological formations covering a wide area in more than a dozen productive formations.
Permian wells produce in depths ranging from a few hundred feet to tens of thousands of feet. While conventional exploration and production continues, horizontal drilling and multistage hydraulic fracturing (in both vertical and horizontal wells) are opening up a new, more unconventional chapter.
The Permian accounts for about two-thirds of crude oil production in Texas and nearly 15 percent of that of the entire U.S. It also accounts for more than a quarter of U.S. rig activity.
According to a 1995 assessment by the U.S. Geological Survey (USGS), the Permian had more than 100 billion barrels of oil in place. The key, of course, is how much of that can be recovered commercially, a figure that has continued to grow with technological innovation. [Read more →]
May 17, 2013 5 Comments
“The way in which even a mature, supposedly quite ‘drilled out’ region—such as the United States—continues to add oil and gas reserves confirms the crucial influence of technological change and questions whether the very notion of fixed stocks and exhaustibility has much value in resource supply analysis. After all, industry operators do not regard their reserves as nonrenewable: they will invest in exploration and development to create new capacity.”
- G. C. Watkins, “The Hotelling Principle: Autobahn or Cul de Sac?,” The Energy Journal, Vol. 13-1, 1992, pp. 22-23.
The gains in U.S. crude oil production in just the past four years have been impressive. Here is where those gains are coming from.
U.S. crude oil production, after sinking to levels not seen since the mid-1940s, rose more than half a million barrels per day between 2007 and 2011. That size of increase has not been witnessed in the U.S. for more than forty years.
The source of that large gain certainly did not occur in the federal offshore, which, with 2011’s unusually sharp drop of nearly 240,000 barrels per day netted an increase of just under 30,000 barrels per day over the four-year period. It was onshore (including state waters) where production r0se from a 2007 low of 3.7 million barrels per day to 4.3 million barrels per day, a surge of some 570,000 barrels per day.
This increase does not even include the jump in the nation’s output of natural gas liquids (NGLs), which reached a record 2.18 million barrels per day in 2011 – an increase of 400,000 barrels per day since 2007.
NGLs and crude oil increases together yield a gain of nearly 1 million barrels per day in just four years – an increase of nearly 15 percent. And these increased barrels mean increased jobs. According to the Bureau of Labor Statistics, the number of Americans now employed in oil and gas development and support activities has grown by more than 100,000 in five years – from 344,000 jobs in mid-2007 to 454,100 in March 2012.
Zeroing in on Crude Gains
The accompanying chart breaks out crude oil production’s increases and declines for major states and federal offshore regions. Texas and North Dakota clearly stand out as major forces behind the increase, with 373,000 b/d and 296,000 b/d gains, respectively, between 2007 and 2011. But 15 other states (including a 40,000 barrels per day net rise for the Gulf’s federal offshore) collectively account for another 200,000 barrels per day. [Read more →]
May 15, 2012 5 Comments