What’s happening now in the Permian basin is no less than “amazing,” and a new, alltime peak for liquids production still isn’t in sight, according to an executive with one of the basin’s biggest players.
A big share of that steady rise in output comes thanks to Concho Resources Inc., points out C. William Giraud, the firm’s senior vice president and chief commercial officer. Giraud began his presentation about the Permian and Concho at Hart Energy’s Executive Oil Conference in Midland, Texas, with a simple declaration: “It’s amazing what’s going on!”
An indicator of just how significant the Permian is in the energy business is its prominent mention in recent feature stories of The Wall Street Journal, The New York Times and other mainstream publications, Giraud said.
He reminded the audience that the 90- year-old play had been losing production for years until around 2005. “The Permian had gone into a long, slow decline to around 850,000 bbl. per day” and industry observers back then agreed that trend would continue in the foreseeable future.
Instead, wells employing horizontal drilling and hydraulic fracturing that target long-known but previously unproduceable plays will have the Permian’s output to around 1.3 million bbl. per day this year. It could reach 2 million by 2017, Giraud said, adding, “It’s all very exciting.”
There’s a lot to investigate even now in the sprawling, multi-play Permian after nine decades of drilling. However, the Midlandbased firm remains focused on key, successful plays, Giraud said. “Our inventory follows the drillbit.”
Giraud said Concho is active on both the east side of the Permian—the eastside Midland Basin where it targets the Wolfberry—and the westside Delaware Basin. It focuses on horizontal projects in the northern Delaware right now, mostly leases in New Mexico’s Eddy and Lea counties with additional tracts just across the border in Loving and Culberson counties, Texas.
Concho also has had success in the southern Delaware Basin, he said, adding, “It’s hard country, wells are more expensive there.” Primary activity in the southern Delaware has been on acreage in Reeves County, Texas.
Giraud also pointed to the Permian’s midstream infrastructure as a major plus for producers. Crude oil and natural gas liquids pipeline capacity linking the region to the Cushing, Oklahoma, crude oil hub and the Gulf Coast has been good—and is getting better.
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