American Oil and Gas Reporter - PBIOS 2014 Official Program Guide - 126

Permian Basin Reports
"It is shocking," agrees Jack Harper, executive vice president of Midland-based
Concho Resources Inc., in assessing a
basin that has produced more than 30 billion barrels of oil since the Santa Rita discovery. "The Permian Basin was on a 40year decline until 2008. Since then, production has nearly doubled. The trajectory we are on is exciting. The Permian
Basin, the Eagle Ford and the Bakken are
the three big drivers in this boom, but we
like the Permian for its multipay possibilities."
The sprawling Permian Basin is a
102,000 square-mile area stretching across
West Texas and southeastern New Mexico that is the nation's largest and most prolific producing region. It is not really a single province, but rather a collection of specialized areas, including the Midland
Basin, the Central Basin Platform that bisects the Permian, the Delaware Basin to
the west, and several shelf plays. Each offers multiple pays.
So when will this remarkable oil boom
in the Permian Basin come to end?
"Not in my lifetime," responds Tim
Dove, president and chief operating officer of Pioneer Natural Resources, who
notes operators have been running 550 or
more rigs in the Permian for the last three
years, which represents nearly one-third
of the rigs operating in the United States.
"We have identified 20,500 locations
on our acreage, and that could be 30,000
or more, depending on spacing," he remarks. "We expect to place approximate-

ly 250 horizontal and 200 vertical wells on
production this year, so you can see we
have decades of drilling remaining."
Dove says much of Pioneer's activity
is in the Spraberry/Wolfcamp field, which
was discovered in 1949 and encompasses eight counties in the Midland Basin.
"We are redeveloping an old field with new
technology," he marvels. "It is an amazing opportunity."
Pioneer announced on Aug. 4 it had
agreed to sell all its assets in the Hugoton
Field in Kansas and in the Barnett Shale
in North Texas for $495 million cash,
which is further evidence of Pioneer's focus on the Permian Basin, according to
Scott D. Sheffield, chairman and chief executive officer.
"Selling those assets will allow us to redeploy capital strategically to our core, oilrelated Spraberry/Wolfcamp assets in the
West Texas Permian Basin, where we are
successfully transforming the substantial resource potential we delineated in
2013 into strong production growth,"
Sheffield states in the company's announcement of the sale.
Leading The Way
The U.S. Energy Information Administration announced in July that six formations were responsible for the bulk of the
Permian Basin's 60 percent increase in oil
output since 2007. EIA says crude oil production in the basin "increased from a low
of 850,000 barrels a day in 2007 to 1.35
million barrels a day in 2013."

The Permian Basin accounted for 18
percent of total U.S. crude oil produced last
year. The EIA says the increase in Permian production "is largely concentrated in
six low-permeability formations: the
Spraberry, Wolfcamp, Bone Spring, Glorieta, Yeso and Delaware."
A look at the oil and gas permits filed
in the month of June with the Texas Railroad Commission provides a snapshot of
what is happening in the Permian Basin.
Andrews County, on the Central Basin
Platform, which has long been the top producing county in the region, had 160 permits filed in June.
But the basin's other five counties
that had more than 100 permits filed during June are all in the Midland Basin,
where the Wolfcamp horizontal drilling activity has taken off in the area that initially saw the vertical Wolfberry play that
sparked the region's decades-long boom.
Reagan (183 permits filed), Glasscock,
(144) Martin (144), Upton (142), and Midland (139) counties on the eastern and
southern portions of the Midland Basin are
the hot spots these days.
Indeed, there seems to be no end to the
growth in the nation's most prolific oil-producing basin, according to Dove.
"We have been filling the existing infrastructure and are building new pipelines
(to transport crude oil directly to the refineries on the Texas Gulf Coast)," Dove
points out, "We still are ramping up in the
Permian Basin. Our company alone is running 24 horizontal rigs. We will be adding
five to 10 rigs a year for the next several
years. We could have 100 horizontal rigs
running in the future. We have enough
crude oil pipelines (to absorb production)
through 2016, but we will need more capacity by 2017. We also need more natural gas liquids pipelines."
Maximizing Recovery

Occidental Petroleum Corporation has more than 5 million gross acres in the Permian
Basin and operates more than 12,000 gross wells. Last year, the Permian Basin accounted for nearly 28 percent of the company's worldwide production, much of it coming from enhanced oil recovery operations.

126 THE AMERICAN OIL & GAS REPORTER

Occidental Petroleum Corporation is
the largest operator in the Permian Basin
with an approximate 15 percent net share
of total oil production. Vicki Hollub,
president of Occidental Oil and GasAmericas, says Oxy has been operating in
the basin for more than 30 years.

American Oil and Gas Reporter - PBIOS 2014 Official Program Guide

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