The Permian Basin | April 2022

Field Overview

Located in West Texas, the Permian Basin has been producing oil for over 100 years. The Permian leads the US in oil production and analysts estimate that there is 43 Gbbl of oil still in the Permian; 80% of reserves in the basin 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

Active Drilling Rigs in Basin- 343 (+9)
Total Rigs in Texas- 357 (+11)
Total Rigs in United States- 728 (+336)
Total U.S. Rigs 37.5% YTD

Top Producer by BOE – Pioneer

Permian Permitting Data
Permits Approved – 504

Basin Highlights

Permian Poised for Surge in Production

The merger and acquisition frenzy in the Permian is still very much alive, fueled by the sustained $100+ price of a barrel of oil. One of the larger deals was made by Earthstone Energy for $638 million worth of assets from Bighorn Permian Resources. Earthstone Chief Executive Officer Robert Anderson commented on the purchase “the Bighorn deal was intended to increase cash flow to the company while growing its presence in the Permian Basin.” The longer oil stays above $100, the more comfortable producers are with making big purchases and adding rigs to their portfolios. 

Biden’s Offer of Oil Leases not Enough to End Legal Challenges

After months of waiting on a final court decision, the Biden administration will once again resume leases on federal land for oil and gas ventures. Despite this, Permian energy companies are still reluctant to get back to business as there is no solid plan for the future. Only 80% of the originally proposed leases will be resumed, and the volatility of leases are still an issue for those wanting to create a solid expansion plan for their company. The Permian has received nearly 500 federal land permits in fiscal 2022, but not much is being done with them due to the uncertainty of the future. 

Can We Decarbonize Permian Shale Gas?

The shift toward a greener future is inevitable and widely agreed upon; exactly how it’s done is an entirely different question, and one that is hotly debated. A recent study in the Permian basin measured the greenhouse gas emissions of several types of ways to utilize natural gas and natural gas liquids (NGLs) in the production of hydrogen as a fuel source. Hydrogen has a much lower carbon intensity than say gasoline, and when burned produces only water and energy. Although producing the hydrogen requires using NGLs, it is still a much greener alternative than using fossil fuels such as oil and its derivatives. 

ExxonMobil Takes Top Score for its Natural Gas from US Permian Basin

As climate concerns become more important for consumers, energy companies are making the necessary changes to not only get an edge in the market, but to stay in business. ExxonMobil’s way of doing so is by producing certified natural gas. When a company can sell natural gas that has been certified as being handled in an environmentally friendly way, it becomes more desirable for customers, one such being Xcel Energy. The market for natural gas is changing and companies that go through the certification process are leading the way. 

Operators with Highest Permitting

Top Producers By BOE—————————— –

Counties with Highest Permitting

Rig Count

Texas Oil Production

Texas Gas Production

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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:

www.eia.gov
www.drillinginfo.com
www.bhge.com
RARE Petro Analytics