The Permian Basin’s tight oil plays are expected to lead the US in production according to new data and estimates.
According to new statistics from Rystad Energy, an independent oil and gas consulting service and business intelligence data firm, the Permian Basin’s “tight” play is expected to pull ahead of all other U.S. tight oil plays by 2020. Tight oil or “Shale oil” is petroleum consisting of light crude oil in formations of low permeability. Thanks to advances in hydraulic fracturing in recent years, tight formations are now potentially profitable.
The data suggests that within the next half decade, the Permian Basin will produce more than 1.8 million bbl/d (oil barrels per day). Early returns form hastened drilling into the Wolfcamp shale and other horizons in the Permian Basin anticipate this area will eventually produce more tight oil volumes than any other tight play in North America. Relatively speaking, unconventional Permian plays like Wolfcamp/Cline Shale are still in early development. Nonetheless, the potential for stacked lateral development (multilateral wells) is vast and has already attracted some very efficient and well known operators. Pioneer Natural Resources’ chief executive officer, Scott Sheffield, has even claimed the Wolfcamp shale could potentially become the largest oil and gas discovery in the world.
In 2014, around 5,000 new wells are expected to be drilled to further develop the multiple unconventional plays in the Permian. Some of the leading companies in the area include Pioneer, Concho and Apache. In terms of well productivity, Pioneer Natural Resources reported the highest 24-hour horizontal well rates. Other, larger companies such as Chevron Corp are also hoping to capitalize on the unconventional tight oil plays. Recently, Vice Chairman George Kirkland stated in an interview with Ernest Scheyder of Reuters that the Permian Basin will be one of five top assets in the whole company.
The Permian has already made news by leading the country in horizontal drilling. The U.S. Energy information Administration claimed individual oil rigs in the Permian Basin rose by 63 in the first half of this year, representing half of the total U.S. increase. This is more than four times the increased rig amount from Eagle Ford and the Williston Basin combined.
Overall, developing tight oil production is expected to add an additional 1 million bpd in 2014. Sixty-five percent of the increase are expected from Bakken, Eagle Ford and Permian plays. Increased investments improved drilling practices, and substantial well performance have carried tight oil production in recent years. Rystad Energy estimates spending in Permian unconventional plays alone will increase by 25 percent in 2014 compared to last year. Spending in the Permian Basin is anticipated to increase steadily for the next 3-4 years, reaching approximately $35 billion by 2018. The question now is just how far America can drive production before drilling efficiency deteriorates and spending growth slows? Regardless, we’re about to produce a whole lot more before tight shale production shows any sign of ending.