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The Imperishable Permian Basin: Growing at 90 (Resourceship in action: I)

By Fred Lawrence -- May 17, 2013

“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.

The USGS’s 2007 estimate of technically recoverable reserves of 1.0 billion barrels of conventional oil and 1.3 billion barrels of unconventional oil likely vastly understates the Permian’s potential with current technology, as the evolution of horizontal drilling techniques and multi-stage fracturing has dramatically changed the prospects of the Permian.

Historic production will be exceeded, according to the Texas Railroad Commission. “The Permian Basin has produced over 29 billion barrels of oil and 75 trillion cubic feet of gas, and it is estimated by industry experts to contain recoverable oil and natural gas resources exceeding what has been produced over the last 90 years.”

Perceptions of conventional fields have changed, as well. A more recent USGS study in April 2012 finds that 18 existing conventional fields alone hold an estimated additional 2.7 billion barrels of oil that are technically recoverable from the Permian using enhanced recovery techniques.

What is the Permian?

The Permian Basin covers a region roughly 250 miles wide and 300 miles long, representing an area covered by the Permian Sea some 250–300 million years ago. Some of its most prominent subsurface features are the Midland Basin in the northeast, the Delaware Basin in the southwest, and the Central Basin Platform in between. These areas contain the Wolfcamp formation, a shale that is 1,500–2,600 feet thick at a depth of roughly one to three miles.

The overlying strata may differ between basins, but the Wolfcamp shale extends throughout most of the Permian, and is believed to be the source rock for oil and natural gas that has migrated over geologic time into the varied formations above. The roughly 7,000-10,000 feet of overlying formations contain untold numbers of structural and stratigraphic traps for oil and natural gas in many different zones, and thus many opportunities for conventional plays over the decades.


For much of its history, the conventional plays of the Permian – which together have yielded thousands of oil and natural gas fields in many different formations have been the target.

More recently, horizontal drilling and multi-stage hydraulic fracturing have greatly improved the economic prospects for the Wolfcamp and other shales. With the complex geology and multiple producing layers in the Permian, the term “stacked plays” is frequently heard. This means, simply, that wells target multiple producing zones, either in a single vertical well or with multiple horizontal wells, which may be both conventional and unconventional.

Although this increases the complexity of the project, the pursuit of multiple targets in a single well allows the recovery of oil and natural gas that might otherwise not be economic.

History: Back to the 1920s

The first commercial well in the Permian was in Mitchell County, on the eastern side of the Permian Basin. Spudded in 1921 and completed in 1923, the Santa Rita No. 1 well dramatically demonstrated the area’s potential, producing for nearly 70 years before it was capped in 1990.

This discovery set off further drilling activity, with several notable finds, including Yates Field (1926), which is still producing today, and is still one of the top 50 fields for proved oil reserves in the United States. A number of major fields discovered in the 1930s, such as Wasson, Slaughter, and Seminole are still producing today, and are still ranked by the Energy Information Administration among the top 20 in the U.S. for remaining proved reserves.

The application of more advanced geophysical techniques of the day, such as seismic surveys, and measuring tiny differences in gravity and magnetic force, helped to uncover structures that could not be discerned from surface features alone. For example, the structure of the Horseshoe Atoll, an ancient reef as much as 90 miles wide, was discovered in the 1940s, and has since yielded a dozen or more significant fields.

However, if there is any major play that has time and again been at the forefront of Permian developments, it is the Spraberry. Lying directly above the Wolfcamp in the Midland Basin, the Spraberry trend was initially developed in the 1940s.

Repeated phases of drilling have occurred there over the past several decades, cycling with profitability, as the producing fairway expanded to its current extent – about 150 miles long and up to 35 miles wide. Such interest continues to be justified by predictable reserves and high success rates – reportedly, it has often been difficult not to drill a producing well in the Spraberry.

Since its discovery, the Permian has had its ups and downs, with activity sloping downward through the 1960s and early 1970s, reviving with higher oil prices in the late 1970s and 1980s, dwindling again in the 1990s, and then roaring back in the 2000s.

Enhanced recovery techniques, which aim to recover more of the oil originally in place than can be produced by primary methods, have found major application in the Permian – first with waterflooding, and then beginning in the 1970s, with CO2 (carbon dioxide) projects.

Production in the Permian Basin reached about two million barrels per day in the early 1970s, declined to 850,000 barrels per day in 2007, but has since rebounded to 1.3 million barrels per day.

The Permian Today

In the late 1990s and early 2000s, lessons learned about new technologies in the Barnett Shale, a natural gas producing region in north central Texas, were applied in the Permian. For decades, operators had often drilled for the Spraberry and extended their vertical wells into the Wolfcamp to gain extra production.

In the late 1990s, as multi-stage hydraulic fracturing techniques were refined, producers increasingly saw the advantage of going even deeper and commingling more of the Wolfcamp intervals with the output of other productive zones. The simultaneous production of the Spraberry and Wolfcamp shales led to the “Wolfberry” nickname for this combination play.


On the Delaware Basin side of the Permian, in southwestern Texas and southeastern New Mexico, a similar vertical combination play has resulted from the commingling of the Bone Spring sands with the Wolfcamp, and given the nickname “Wolfbone.” The Avalon Shale and other discrete intervals are also the target of multiple horizontal wells, which take advantage of the same multi-stage fracturing technology used in the vertical Wolfberry and Wolfbone plays to unlock economic reserves.

The potential of multi-stage fracturing in both vertical and horizontal wells has recently attracted a revival of activity to the Permian. There are currently almost 500 rigs active in the region, which makes up more than a quarter of the U.S. total. Of the rigs active in the Permian, nearly 40 percent are drilling horizontal wells, particularly in the Delaware Basin, double the share of two years ago. Vertical drilling is still very strong – more than 6,000 Wolfberry wells have been drilled within the last 10 years, according to the Texas Railroad Commission.


One of the newest plays gaining attention is the Cline Shale, though at this stage, much remains uncertain. The Cline underlies the Wolfcamp in the Midland Basin and extends farther north and east across the Eastern Shelf, with an extent of about 70 miles wide and 140 miles long. The target zone for oil production ranges from about 200 to 500 feet thick. Some producers are developing it in combination with the Wolfcamp. While the potential technically recoverable reserves for the Cline are still uncertain, they could be extremely large, and with an API gravity around 40 degrees, a good quality crude can be expected.

Permian Players

The Permian Basin also tells a story of the synergy between major and independent producers. The earlier days of the Permian were dominated by majors, but as the majors moved out from the 1970s through the 1990s to pursue opportunities abroad and offshore, the independents moved in to find new ways to keep the Permian productive.

With the Permian’s quickening pace of both unconventional and conventional plays, the majors have been coming back, along with overseas companies seeking joint venture opportunities. Meanwhile, master limited partnerships (MLPs) have enabled long-term cash flow from developed producing properties to be transformed into an efficient financing and asset ownership vehicle, thereby freeing producing companies to continue to focus on developing new reserves.


Enhanced recovery techniques have also played a prominent role in extending Permian resources. Typically, primary production may leave 80 to 90 percent of oil unrecovered. More oil can be recovered with secondary recovery via waterflooding, but may still leave 50 to 70 percent of the oil trapped. Tertiary recovery using CO2 flooding to further increase the productive life of existing fields has been extensive in the Permian. In fact, more than half of the CO2 projects in the U.S. are found in the Permian.

Infrastructure has also been, and continues to be, integral in moving increased production to market. Reversal of the Longhorn Pipeline, expansion of the Permian Express Pipeline, the proposed BridgeTex Pipeline, and the soon-to-be-operational West Texas Gulf Pipeline are just some of the projects aiming to move more Permian output eastward to Gulf Coast refineries instead of Cushing, Okla.

Projects like these, along with those such as the reversal of the Seaway Pipeline between Cushing and the Houston area, are all designed to ease the buildup of crude at Cushing that has been spurred by the Bakken’s success and the increasing availability of Canadian crude. The expansion of natural gas processing capacity has also been a priority in the Permian.

Bringing in the Future

The Permian’s revival is unlocking known, but previously uneconomic reserves —and this is just the beginning. One key has been finding the right technological approach with the ability to take advantage of multiple productive zones, both conventional and unconventional, in the same well. Technological improvements are also key. The industry must continue to improve drilling and completion efficiencies, management of water use, optimal staffing of operations, and cost reduction in a region with a long history of oil and natural gas production, while also remaining sensitive to impacts on local communities.

The Permian contrasts with plays such as the Bakken, Haynesville or Fayetteville, due to its long history as a major, established producing region. Rather than being something totally new, the Permian’s long history is the story of an “old” basin that has yet again been revived by new technologies, new geologic understanding, and new market environments.

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 proven reserves in a remarkable fashion.


Fred Lawrence is vice president of economics & international affairs at the Independent Petroleum Association of America (IPAA). He wishes to thank Steve London, Brad Wall, Matthew Thompson, Nancy Turner, Robert Ready, Chip Minty, and Kyle Rose for their contributions to this study.


  1. Kenneth Haapala  

    Outstanding, clear description of the history and the present.


  2. John Garrett  

    I very much enjoyed reading this article. I’ve got one minor criticism— the illustrations are impossible to read because they’re far too small.


  3. Freda Hamric  

    Great information and history. Thank you.


  4. rbradley  

    John–they should be a little better now…..


  5. Brian Mahn  

    Great article, thanks Fred for sharing Permian Basin’s story with us.


  6. The Mighty Bakken (Resourceship in action: II) - Master Resource  

    […] Part I of this “Resourceship in Action” is “The Imperishable Permian Basin: Growing at 90.” […]


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