Permian to buck national trend of falling output

January 27, 2024

Midland Reporter-Telegram

by Mella McEwen

US crude oil and natural gas production are expected to across the nation’s Lower 48 shale basis in February, according to the US Energy Information Administration.

Except for the mighty Permian Basin, that is.

According to the EIA’s latest Drilling Productivity Report, oil output from the Permian Basin is expected to rise 5,000 barrels per day from January to February. Output will be led by production from new wells – 418,000 barrels per day. That gain will offset a decline in production from legacy wells, which is forecast to fall 413,000 barrels a day. The EIA forecasts the Permian Basin will produce 5,974,000 barrels per day in February.

Permian Basin natural gas production is predicted to rise 11,000 cubic feet per day. Output from new wells is expected to rise 777,000 cubic feet, offsetting the 655,000 cubic feet decline in output from legacy wells. According to the EIA, the Permian will produce 24,393,000 cubic feet per day in February.

“It is no surprise to our members and those living, working, raising families, and creating jobs here that the Permian Basin is America’s oilfield and is increasingly becoming the most important operating region in the free world,” commented Ben Shepperd, president of the Permian Basin Petroleum Association. According to the EIA, about 6 million barrels of oil and nearly 25 billion cubic feet of natural gas is produced each day in the Permian Basin alone, he wrote in an email to the Reporter-Telegram.

The Texas Workforce Commission recently reported that more than 3,000 oil and gas jobs were created in December amid record oil and gas production in the Permian Basin of Texas and New Mexico, he continued.

Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, noted in an email to the Reporter-Telegram that risk premium has been reduced with record levels of production in the Permian and plenty of spare capacity in OPEC+.

“China’s lackluster recovery, uncertainty in the global economic outlook, coupled with rising geopolitical tensions, related supply chain disruptions, are, in a sense, balancing our outlook,” he wrote.

Longanecker pointed out that the Permian Basin is responsible for 28% of US barrels of oil equivalent production, and 71% of US production is coming from Texas, and those barrels will continue to play a dominant role in meeting global demand this year.

“Depending on how these factors play out, we may see a decline in other US basins, as EIA suggests, but there are many potential scenarios to consider, as well as how shortsighted energy policy from Washington could impact domestic supply and exports,” Longanecker concluded.

Nationwide, the EIA says total monthly crude oil volumes are expected to drop by about 2,000 barrels a day from January to February.

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