The highly attractive production economics of the Permian’s multistacked, hydrocarbon-packed Delaware and Midland basins all but guarantee that the region’s output of crude oil, natural gas and natural gas liquids will continue rising—possibly at an even faster rate than what we’ve seen lately. That raises an all-important question: Will there be sufficient pipeline takeaway capacity in place to keep pace with all that growth? If there isn’t, some Permian producers will suffer from downward pressure on local prices—and that may cause them to have second thoughts about the big bucks they paid to gain access to the best Permian acreage in the first place. A production-growth forecast and a deep-dive assessment of existing and planned pipeline takeaway capacity are at the heart of RBN’s new Drill Down Report on the Permian. Today we provide highlights from the new report.
All you’ve heard is true: The Permian is back, bigger and badder than ever. Producer economics in the play’s Delaware and Midland basins are the best in the U.S., and half of all rigs drilling for crude oil in the U.S. are in the region. Put simply, the Permian, which covers parts of West Texas and southeastern New Mexico, has been the engine that has propelled U.S. crude oil production upward. As shown in the left graph in Figure 1, total production from all of the other major shale/tight oil basins—Eagle Ford, SCOOP/STACK, Niobrara, Bakken and Offshore Gulf of Mexico—is down from about 5 MMb/d in 2015 to about 4.3 MMb/d today. The number has been flat for the past six months.