The Permian Basin |December 2022
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- 354 (+4)
Total Rigs in Texas- 380 (+14)
Total Rigs in United States- 771 (-5)
Total U.S. Rigs 28% YTD
Top Producer by BOE – Pioneer
Permian Permitting Data
Permits Approved – 611
Several leading majors in the Permian Basin continue increasing CAPEX allocations for the Permian Basin despite a slight retreat in energy prices in H2 of 2022. ExxonMobil expressed that it will maintain its $25 billion per year CAPEX program through 2027, much of which will be allocated to their “high-return” prospects like Guyana, Brazil, and the Permian Basin through subsidiary XTO. The Permian is currently running more than 60 more rigs than it was this time last year. However, the downward trend in commodity price observed in H2 of 2022 from the June peak of $122/bbl could threaten the CAPEX outlook for other E&P companies.
Chevron has earmarked $4 billion for Permian Basin development in 2023. Half will go towards shale development and half will go towards emissions reduction or renewable fuel production. Total company-wide spending will be $17 billion for the next year, with the balance of the capital spend going into the Eastern Mediterranean, California, Colorado, Western Australia, Kazakhstan and the other assets in the Chevron portfolio.
Shale companies, on average, reuse about 30% of their wastewater. XRI, a Permian Basin waste water management and frac water recycling company, is hoping to increase that percentage. With the Ogallala Aquifer, the main fresh water aquifer underlying West Texas and a large portion of mid-western states, depleting at 6.5X the recharge rate, there is hope that recycling frac water will alleviate some strain on the freshwater supply. Seismic events, partially attributable to wastewater injection, might also be reduced in magnitude and frequency with less wastewater being injected.
With ever-increasing activity in the Permian Basin and an ever-increasing impetus to reduce emissions intensity, BPX Energy has shifted towards building electric central collection facilities in its West Texas leasehold acreage. The first such facility, Grand Slam, located near Orla, Texas, incorporates electric compressors to collect low-pressure gas that would otherwise be vented or flared. Diamondback Energy and Pioneer Resources, two of the largest players in the Midland Basin, have begun hiring electric drilling rigs and electric frac fleets in an effort to reduce Scope 1 and 2 emission.
Operators with Highest Permitting
Top Oil Producers—————————— –
|Rank||Company||November Production (MBO)|
Counties with Highest Permitting
Texas Oil Production
Texas Gas Production
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