New Crude Production Record in Sight as Permian Basin Comeback Continues
As oil prices break through multiyear highs, the heartland of US onshore activity is nearing the record levels of output reached before the pandemic.
Crude production in the Permian Basin has topped 4.82 million B/D this month and is on track to head higher. This is according to the US Energy Information Administration (EIA) which issued new data this week showing the region spanning Texas and New Mexico is nearing a full recovery to pre-pandemic production levels.
The administration said it expects Permian output to reach 4.88 million B/D in November from the nearly 45,000 producing wells drilled there over the past decade. That places regional production within striking distance of the all-time high of 4.91 million B/D achieved in March 2020. Natural gas production in the Permian is already flowing at a record 19 Bcf/D.
The EIA noted that the Permian accounts for about 30% of US production and 14% of natural gas output. US production on the whole stands at 11.3 million B/D, which is off from the record 12.8 million B/D seen in January 2020.
Permian output bottomed out in February at 3.61 million B/D after a major ice storm forced widespread shut ins and disrupted field activities. As the region's comeback unfolds, the EIA highlighted in a separate report this week that operators are trending toward longer horizontal wells, a move it said is supporting recent production figures.
- During the first half of the year, new Midland Basin wells were drilled with an average lateral length of 10,000 ft, and in the Delaware Basin the average was 8,700 ft.
- Laterals of 11,000 ft or longer have swelled from less than 1% of the well inventory in 2014 to about 20% today.
- Operators are also starting to see success with laterals longer than 15,000 ft, and a quarter of all pads had at least nine wells during the first 6 months of 2021, the EIA said citing data from Enverus.
- Not changing much are proppant and fluid loadings which have remained steady since 2017, the agency reported.
The apparent improvements have come at a time when US oil is trading above $83/bbl, a price not seen since 2014. US onshore producers have responded to the relative price strength by adding a substantial number of rigs and completions crews over the past year.
Energy analytics firm Enverus said the US rig count is 637 this week with the Permian representing 243 active as of 17 October. Year over year, Permian operators have added more than 100 rigs.
The most active operators this month according to Enverus are Pioneer Natural Resources with 24 rigs; EOG Resources with 19; Mewbourne Oil and Devon Energy with 18; ConocoPhillips and Continental Resources with 17.
Analysts at Primary Vision, which tracks US fracturing fleets, said for the week ending 15 October, the total number of pressure pumping spreads was 268, up from 130 roughly this time a year ago.