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April 9, 2015

Nowhere to Hide But Permian

The Permian Basin in West Texas is the most active hydrocarbon-producing area in North America, and even in a low-price environment it remains among the most favourable areas on the continent to drill of oil, natural gas liquids (NGL) and natural gas, according to the latest report issued by Bentek Energy, an analytics and forecasting unit of Platts.

Graphic Source: Google Image, added by EconMatters
In the last three years, oil production in the Permian, which straddles Texas and New Mexico, has jumped 50%, while natural gas production has climbed 30% and NGL output has increased 61%, the 20-page report states.  Horizontal drilling, new exploration and production techniques, and a multitude of unconventional producing formations have led to a major Permian renaissance.
The Permian also is showing greater resilience during the recent drop in drilling in response to falling crude oil, NGL and natural gas prices. Permian rig count declines have been mainly vertical rigs, rather than horizontal rigs.
“Unlike other U.S. producing basins, the Permian Basin is less exposed to adverse market conditions because of its more favorable production economics as well as its closeness to major markets,” said Ross Weyno, senior energy analyst at Bentek Energy.   
“Nowhere to Hide Except the Permian” provides a detailed overview of the characteristics that make the Permian Basin such an attractive location for producers even in a low-price environment. The report includes detailed information on the following:
  • The Permian crude oil market;
  • NGL infrastructure and natural gas market dynamics in the Permian and surrounding regions;
  • A forecast of Permian crude oil, NGL and natural gas production over the next five years; and,
  • A review of major challenges and risks ahead for Permian producers.
“Bentek currently expects Permian oil production to increase 40% over the next five years,” Weyno said. “However, the Permian is not immune to adverse market conditions. If crude prices fall to less than $40 perbarrel for a sustained period, Permian production would be at risk.”
Ends --
Source: Commodites Now (EconMatters author archive here)  

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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Item Reviewed: Nowhere to Hide But Permian Rating: 5 Reviewed By: EconMatters