Permian Hottest Shale Play | Russell T. Rudy Energy LLC
While the oil price collapse has been devastating to oil field operations in most shale plays, “Rigzone” reports that this is certainly not the case in the Permian Basin of West Texas. The Basin covers an area the size of Syria. County roads are still jammed with trucks and energy companies are looking for deals.
Other major shale plays such as the Bakken and Eagle Ford have seen production drop by 12% and 25% respectively. Conversely, Permian output is expected to rise another .6% to 2.02 million barrels a day. This potential is not being overlooked by companies as large as ExxonMobil and as small as regional independents.
Allen Gilmer with Drilling Info Inc. explains the region’s appeal “We’re already seeing a lot of people that are targeting the Permian. If you were to look for the most stable area today to go do anything, it’s got to be there. Today you might even argue it’s more stable than Saudi Arabia.”
ExxonMobil has bought 48,000 acres in the Permian Basin since August and is still meeting with small, closely held, operators to discuss further purchases and joint ventures. Many industry observers attribute Anadarko’s unsolicited offer to buy Apache to the latter’s 3.2 million acre position in the area.
One of the main attractions of the Permian is multiple pay zones which overlay each other. In some cases these can be up to 5,000 feet thick. With such significant upside, operators are willing to invest in projects which can be profitable even in a $40 per barrel world. A single structure, the Sprayberry, is estimated to potentially hold 75 billion barrels of recoverable oil. That is enough to supply the entire world for over two years.
According to Drilling Info’s Gilmer, “Everyone recognizes that the Permian Basin is by far the richest land on earth. The only thing holding it back from more and more is the engineering, and I think this is an industry that’s really proven that the engineering gets better every year.”
Will Giraud, Chief Commercial Officer of Concho Resources, contends that roughly $50 billion in private equity capital is funding 80 management teams focused on opportunities in the Permian. Giraud, whose company has about 700,000 acres in the area, went on to say “It’s the last oil basin standing. It’s still the last place you can put together a material position. It’s the last place you can drill in this environment and make money. It’s the last place where there’s still a tremendous amount of resources to be discovered.”
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=141637&utm .
