Economic Opportunities in Oil and Gas Production in West Texas
The Permian Basin, located in west Texas and southeastern New Mexico, is one of the largest oil and gas producing areas in the world. Recent growth, driven by improvements in technology (such as hydraulic fracturing and horizontal drilling), has directly and indirectly greatly affected the economy of the basin, as well as that of the rest of the region. People from all over the country are coming to take advantage of the influx of jobs and income that the oil and gas boom has generated. In the past year, for example, hotels in the Midland-Odessa metropolitan area (the fastest growing in 2011 and 2012) went for as much as $ 400 a night.
This economic phenomenon led the Permian Basin Petroleum Association (PBPA) to carry out an analysis of the activity in the region. According to this report, more than 190,000 jobs were created within the oil sector and production was $ 77.9 billion in 2013. As for other sectors, the impact was $ 113.6 billion and 444,000 jobs.
Geographically, the Permian Basin is approximately 400 kilometers wide and 480 kilometers long. It spans 50 counties, which in Texas are: Andrews, Borden, Cochran, Coke, Crane, Crosby, Culberson, Dawson, Dickens, Ector, Edwards, Floyd, Gaines, Garza, Glasscock, Hale, Hockley, Howard, Irion, Jeff Davis, Kent, Kimble, Lamb, Loving, Lubbock, Lynn, Martin, Midland, Mitchell, Motley, Nolan, Pecos, Reagan, Reeves, Scurry, Sterling, Terry, Tom, Green, Upton, Val, Verde, Ward, Winkler , Yoakum.
According to the PBPA report, the Permian Basin has more than 392,000 wells drilled, the highest number in the state, accounting for about 37 percent. The second majority within the entity is in the Texas Gulf Coast Basin, which comprises the Eagle Ford, with 257,938 wells (24%). In addition, the Permian also has the highest daily liquid production with more than 1.49 MMbbl (44.6%).
Number of platforms
As mentioned above, the evolution of hydraulic fracturing has driven the growth of horizontal wells. In December 2013, 469 rigs were reported, giving Permian the highest number of any other region. This represents 56% of active rigs in Texas and 14% in the world.
The strengthening of platforms was impressive despite the effects of the recent recession. After 2008, oil prices recovered rapidly, a trend that natural gas did not catch up with. In response, oil companies focused their efforts on crude from effective basins, such as the Permian Basin and the Eagle Ford Shale. In 2012, the total number of rigs in Texas increased by 13, while in New Mexico it decreased by 3.
Because the Permian Basin has less experience in horizontal drilling, the PBPA estimates high potential in its drilling. The new drilling permits will allow high productivity, causing the level of activity to grow by leaps and bounds.
Trends that have helped production:
- Horizontal drilling
- Technological evolution of hydraulic fracturing
- Low viscosity water-based fracturing (slick water)
- Changes in fluid type and quantity
- Use of 3-D seismic studies
- Multi-well platforms
- Diversification of rules that provide access to undrained areas in existing pools.
Unfortunately, lately there has been a slight decrease in oil production due to oil costs, a trend that is being seen throughout the world. However, many experts predict that the Permian Basin will stabilize in a relatively short period, implying that there is only room to continue and possibly a further increase in the number of rigs for the summer, when prices are said to strengthen.