The Permian Basin has prevailed throughout the industry downturn over the past several years to continue to prove its strong resilience and persistence for growth. The shale industry has drastically altered its prior operations in light of recent market fluctuations to focus more fully on identifying the optimal target locations for expansion or creating new campaigns to enhance EURs and economic returns. With the Permian Basin in the lead for onshore shale, new operators have flocked into this region to compete with existing operators to leverage the opportunities present with massive capital investments and large drilling strategies, which are likely to propel the shale industry back to prior production highs seen in 2014.
Overall, industry sentiment has been becoming much more positive, with many more acquisitions being made, rig counts increasing and West Texas Intermediate trading near recent highs of $54/bbl. The average rig count in the U.S. has been on the rise already in 2017, with an average of 700 rigs running. Of this average count the Permian holds about 42% of currently running rigs.
TGS, a provider of global geoscientific data products and services, announced in February 2017 the immediate availability of a comprehensive well database in the Permian Basin. TGS has created a database of products in the Permian Basin available commercially. With more than 430,000 wells in the Permian Basin, TGS has validated well header data for 357,000 wellbores, faster logs for all wells, digital log-assisted ASCII standard format for more than 280,000 wellbores and production volumes for all producing wells in the basin. The company also offers forecasted EURs for each producing well in the basin as well as interpreted formation tops and basin temperature models covering the entire basin.
Through this comprehensive operational process TGS has found thousands of previously unidentified wellbores. After researching millions of pages of well files, completion reports and regulatory files, and a large library of well log data, TGS has been able to complete the Permian datasets to a new level. Due to this thorough work along with generous operator donations over the past two years, much of these data are available to clients through TGS’ R360 and LOG-LINE Plus! web portals.
This dataset is available through basinwide data packages covering the Midland, Delaware or Central Platform regions or over the entire Permian Basin. All data products come with 100% coverage of the wellbore system from surface to total depth; have been qualitycontrolled for completeness; and ensure all attributes such as depth, direction, height and elevation meet the most stringent guidelines for accuracy.
The Permian Basin well data and interpretive products complement new and planned TGS 3-D seismic surveys in the basin.
Starting with the Permian Basin, TGS’ newest product, Basin Analytics, leverages the vast well production and forecast datasets, geographic information system information and detailed economics to deliver a detailed evaluation analysis. Basin Analytics is designed to be a strategic partner for clients and provides detailed research across the upstream unconventional project life cycle to aid in informed decision-making on the value of a particular area for acquisitions, divestitures or drilling campaign strategies.
Across the U.S. the average drilled but uncompleted well (DUC) inventory had been holding relatively flat in 2015 before marginally increasing throughout 2016 as fewer wells were completed due to economic constraints. The Eagle Ford has continuously shown the largest DUC inventories year-over-year, followed closely by the Permian. However, in 2016 the Eagle Ford (total year average of 1,398 DUCs in inventory) has begun to reduce its overall DUC inventory to fall more closely in line with the Permian (total year average of 1,461 DUCs in inventory).
According to the U.S. Energy Information Administration (EIA), the Permian Basin has been increasing overall production by about 9%, up from an average of 8.7 Mboe/d in 2016 to 9.5 Mboe/d in early 2017 (Figure 1). The basin’s average oil production also has increased from a 2016 average of 2 Mbbl/d to 2.18 Mbbl/d in 2017. Despite the increase in production, the overall completed well counts for the basin have been largely decreasing from its historical highs experienced in 2014 at an average of 593 wells completed per quarter to a low of about 200 wells completed per quarter as seen in 2016 (Figure 2). The overall DUC inventory will be drawn down into 2017 as Permian operators begin to complete more wells.
FIGURE 1. According to the EIA, the Permian Basin continues to increase production (boe/d), while the average completed well counts (blue line) recently have begun to increase. (Source: EIA DUC analysis, TGS Basin Analytics)
FIGURE 2. Using the EIA’s DUC analysis, the Permian’s average completed well count has been decreasing since 2014. However, a rebound in activity has begun, signaling an increase in 2017. This increase in completed wells will draw down the DUC inventory in 2017. (Source: EIA DUC analysis, TGS Basin Analytics)
Basin Analytics analyzed about 6,400 horizontal/directional wells drilled within the Delaware Basin from 2006 to 2016 and has identified the top 10 performing operators. When focusing on well production performance, the top operator was identified as Cimarex Energy, which shows an average 30-day IP rate of about 881 boe/d in Culberson County and an average EUR of 1,457 Mboe. EOG Resources follows Cimarex with an average 30-day IP rate of 226 boe/d in Eddy County and an average EUR of 331 Mboe.
The Permian Basin will continue to prove to be a hotbed for drilling activity. With the continued push for technology innovation, the basin will likely carry the market share for many years to come.
2022-05-24 - Saudi Arabia will likely raise output to 11 million bpd later this year when a broader pact between OPEC and allies expires.
2022-05-25 - Kinder Morgan, EIV Capital, GreenFront Energy Partners, Green Impact Partners and Quantum Energy Partners discuss the benefits and challenges of RNG.
2022-04-28 - Plans for energy security and ESG must be balanced, Lisa Epifani, manager of ESG and sustainability for Chevron, said at Hart Energy’s Energy ESG Conference.
2022-04-19 - Robin Fielder, EVP of low carbon strategy and chief sustainability officer at Talos Energy who is also an honoree of Hart Energy’s Oil and Gas Investor Influential Women in Energy program, shares the value proposition for carbon capture.
2022-05-25 - Shareholders earlier blocked proposals to accelerate carbon emission reductions at oil and gas producers TotalEnergies SE, BP Plc, Shell Plc, Occidental Petroleum Corp. and ConocoPhillips Co.