The Permian Basin |January 2023

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- 352 (-)
Total Rigs in Texas- 370 (-)

Total Rigs in United States- 760 (-)
Total U.S. Rigs 18% YTD

Top Producer by BOE – Pioneer

Permian Permitting Data
Permits Approved – 732

Basin Highlights

EPA Moves Away from Permian Basin Air Pollution Crackdown

The Environmental Protection Agency recently moved a proposal to designate the Permian Basin as an ozone nonattainment zone from active to pending. Citing other, more pressing obligations that are diverting the agency’s attention away from this particular issue, the EPA seems to be implicitly saying that it will likely not designate the Permian Basin as an ozone nonattainment zone in the near future. Many proponents of oil and gas in the Lonestar State are pleased with this decision because such a designation could increase inefficiencies, slow production, and reduce jobs in the Basin.

Texas is Flush with Money, Largely Thanks to Oil and Gas

Texas Comptroller Glenn Hegar reported in January that the State of Texas operated at a record surplus of $32.7 billion in 2022 which will be worked into the 2024-25 budget in the coming months. Texas’ tax collection grew by 25.6% from 2021 to 2022, very nearly doubling the previous yearly Texas state tax revenue increase of 13%. Much of this growth was powered by oil and gas severance taxes. Ed Longanecker, President of the Texas Independent Producers and Royalty Owners Association (TIPRO) encouraged lawmakers to consider investing some of these profits into infrastructure in the oil producing regions of the state and to consider investing into the Texas Railroad Commission.

Fracking Fleets Powered by Associated Gas – Results and Significant Savings in the Permian Basin

Frac fleets using electric pump trucks or “dual fuel” pump trucks (trucks incorporating both natural gas and diesel fuel streams) have been growing in popularity in the Permian Basin and in the other shale basins in the US. One case study indicated that a dual fuel frac fleet used 42% less diesel than a traditional diesel frac fleet. Electric frac fleets, or “e-fleets” use electric frac pumps, often powered by a natural gas turbine on location. These fleets use far fewer pump trucks (8 instead of 20 trucks), have reduced Scope 1 emissions, and are far quieter (thus, easier to use near populated areas).

Texas Oil Patch Gears Up for More Growth and Spending with the Permian Leading the Way

Texas oil and gas executives were asked about their capital budgets for 2023. 25% of oil and gas firms reported that their capital spending will “increase significantly”, and 39% indicated that their spending will “increase slightly” with most of the rest of respondents indicating that their spending will be similar to 2022 levels. According to the EIA, Permian production is expected to increase by 440,000 barrels per day. As of November 2022, the Texas oil and gas industry employed over 209,000 people, which is 50,000 more people than it did in late 2020. Oil and gas employment has made up considerable ground on the highs in January 2019 of over 240,000 jobs in the state in oil and gas, mining, and support activities.

Operators with Highest Permitting

Top Oil Producers—————————— –

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