Mini series - The Permian Basin
Did you know that the Permian Basin in the U.S. produces approximately the same amount of crude oil as Iran, the 3rd largest OPEC producer?
Crude oil production in the Permian Basin has expanded rapidly since 2014 and now it is by far the largest production area in the U.S. with a daily production of nearly 3.5 mpbd (see figure 1). Investment in the area has been massive and some of the large players are starting to look into the area again after investments plummeted due to the rapid reduction of the oil price in 2014 which made production non-profitable. Investment inflows can be observed by the rapid increase in oil rigs in the area which has gone from a low of 137 in mid-2016 to currently 477 (see figure 1). However, the rapidly increasing oil rig count is not the sole reason for the huge production; technology has been key as well. Prior to the massive drop in oil prices in late 2014 most rigs were drilling vertically in conventional oil fields. Now most rigs are drilling horizontally which increases the productivity per well remarkably.
Do you want to know more about the Permian Basin? Click here to explore how this rapid increase in oil rigs influences the crude oil price.