Despite a few recent snags, Permian basin production should continue its upward trend through 2019.
The prolific Permian basin, which stretches across much of West Texas and southeastern New Mexico, continues to lead the U.S. shale expansion. In June 2018, American crude exports soared to 2.200 MMbpd, up from 2.005 MMbpd reported the month prior, according to U.S. Energy Information Administration (EIA) data. With global oil demand on the rise, and refiners running at or near capacity, more and more crude is being sent abroad. Additionally, U.S. sanctions on Iran, to a certain degree, are creating more demand for U.S. exports, as some buyers worldwide seek to replace Iranian crude. However, the granting of waivers to eight countries by President Trump, allowing them to continue buying Iranian crude in the short term, has blunted the impact of this factor.
According to EIA’s most recent Drilling Productivity Report, the Permian basin in November was producing 3.632 MMbopd and 12.162 Bcfgd. This doesn’t include the 3,866 reported DUC wells awaiting completion in the Permian, suggesting that a flood of new production is likely to be released into the market during 2019. Average lateral lengths in horizontal wells grew more than 1,500 ft, to an average 7,500 ft at the end of 2017. This year, the range of lateral lengths has been mostly between 4,500 ft and 10,500 ft, although some wells have featured lengths up to 15,000 ft. It is believed that the average lateral length has grown to more than 8,000 ft during 2018. Read more…