The Permian Basin | December 2020
Located in West Texas, the Permian Basin has been producing oil for over 100 years. It leads the US in oil production and estimates put 43 billion bbl of oil still in the Permian; 80% of those reserves are believed to be at less than 10,000 feet. Some top formations are the Wolfcamp, Upper/Lower Spraberry, and the Leonard.
State Drilling Statistics (End of December)
Active Drilling Rigs in Basin- 175
Total Rigs in Texas- 161
Total Rigs in United States- 351
Total U.S. Rigs down 56% YTD
Permian Top Producers
Top Gas Producer – Cimarex Energy
Top Oil Producer – Diamondback Energy
No More New Mexico Freshwater Sourcing
Last month’s Basin Breakdown discussed how Solaris Water Midstream began operating a new facility to service the growing needs for water processing thanks to the increased hydraulic fracturing activity. December brings even more good news for the company as New Mexico puts a stop to freshwater sourcing from state lands for drilling and completions. This means that projects applying to use this fresh groundwater will be denied as an emphasis is being put on recycled water use. The primary reason for the announcement falls on the shoulders of water scarcity as New Mexico has become a more prominent producer in the last 5 years. This development has been in the works for a while. Consider that the region of New Mexico hosting the Permian receives 13 inches of rainfall annually. Municipalities and farmers have been filing lawsuits to steal what they feel is their fair share back from oil and gas. This solution should appease everybody and be a huge benefit to Solaris Water Midstream allowing them to develop midstream solutions to develop recycled water for whoever demands it.
Diamondback Finds Means of Growth
Apache plans to reduce development in the Permian and pursue global developments amidst depressed prices. The company recently completed its third exploration test off the coast of Suriname which happened to be the best so far. With plans to finish another two exploration wells through the end of the year, Apache is hoping to prove its competence to partner Total. While activity abroad is going well, activity in the Permian will be suppressed. Apache’s Permian centerpiece, the Alpine High play, returned most of its shut in volumes but will continue to receive minimal funding through the end of 2020. If prices do recover and make new wells economic, they will change their plan. For now, they will continue investments in the Suriname project and focus on completing DUCs domestically.
Top Gas Producers (2020 cum)
Top Oil Producers (2020 cum)
Texas Oil Production
Texas Gas Production
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