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Page added on January 5, 2019

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The World’s Most Productive Oil Field

Production

Many people will tell you that the production rate of Saudi Arabia’s Ghawar oil field, which has yielded 5 million barrels of petroleum per day for decades, will never be surpassed. In fact, no other oil field has ever come close to topping the production rate of Ghawar, and up until recently I would have agreed its production would never be topped.

But I am becoming more convinced that the Permian Basin could eventually give Ghawar a run for its money.

That argument would have been laughable a decade ago, but there are three pieces of data that suggest the argument isn’t as preposterous as I once believed it was.

A Rapidly Rising Production Rate

First, there is the actual production rate in the Permian. Consider for a moment that the Permian Basin has been producing oil since the 1920s, and reached the two million BPD mark in the 1970s. Production slowly declined, until dipping back under one million BPD around the turn of the 21st century.

Permian Basin oil production slowly crept back up to one million BPD in 2010, and then hydraulic fracturing sent production soaring. By the end of 2018, production had reached 3.8 million BPD, vaulting the Permian into second place among the world’s leading oil fields. In under a decade — and after already producing oil for a hundred years — Permian Basin production has increased by 3 million BPD:

(Click to enlarge)

Permian Basin oil production 2007-2018

A Soaring DUC Inventory

But are there indications that Permian production will continue to grow? Yes. Consider the soaring inventory of drilled but uncompleted (DUC) oil wells. These are oil wells that have undergone the initial process of drilling (i.e., the hole in the ground has been drilled). However, to get the well ready for production requires casing, cementing, perforating, and hydraulic fracturing.

There are a number of reasons that a well might be drilled, but not completed. It can be as simple as a lack of available rigs and manpower to complete the wells. Or, it could be that producers are waiting for more takeaway capacity for the oil, which has been an issue in the Permian. Finally, some contracts may require that drilling has been initiated in order to hold a lease.

Regardless of the reason, DUC wells generally turn into completed wells. And the inventory of DUC wells suggests that Permian Basin production still has a lot of room to run. At the end of 2013, there were 636 DUC wells in the Permian Basin (when oil production there was 1.4 million BPD). By the end of 2018, with Permian Basin production at 3.8 million BPD, the number of DUC wells had soared to 4,039.

(Click to enlarge)

Drilled, but uncompleted wells in the Permian Basin.

Oil producers have drilled an average of 5,316 wells per year in the Permian over the past five years, but have only completed an average of 4,620 wells per year. If all drilling suddenly ceased in the Permian, there is nearly a year’s worth of drilled inventory that still needs to be completed. That’s a lot of oil waiting to be extracted.

An Enormous Resource

The final piece of the puzzle is the amount of oil that remains to be extracted. In just the Texas part of the Permian, ~30 billion barrels of crude and ~75 trillion cubic feet (Tcf) of natural gas have already been extracted. But a new assessment by the U.S. Geological Survey (USGS) has suggested that there’s still a lot to be extracted.

In 2016, the USGS had estimated that the Wolfcamp shale in the Midland Basin portion of the Texas Permian Basin contains a mean of 20 billion barrels of oil, 16 Tcf of associated natural gas, and 1.6 billion barrels of natural gas liquids (NGLs). This estimate was for undiscovered, technically recoverable resources, and was the largest estimated continuous oil accumulation that USGS had ever assessed in the U.S.

In its most recent report, the USGS has included the Wolfcamp shale and Bone Spring Formation of the Delaware Basin portion of the Permian Basin for the first time, and the estimates are eye-popping. The new estimated mean of undiscovered, technically recoverable resources in the Permian basin are 46.3 billion barrels of oil, 281 Tcf of natural gas (17.5 times higher than the 2016 estimate!), and 19.9 billion barrels of NGLs.

It is important to note that these estimates are of technically recoverable resources, as opposed to proved reserves. The difference is that the latter must be economically recoverable at prevailing prices. That may not be the case for a good portion of these resources, but that can change if oil and natural gas prices rise.

Nevertheless, it’s hard to escape the possibility that 1). Given the three million BPD of crude oil production added in the past decade; 2). The huge inventory of DUC wells; and 3). The enormous size of the resource — it isn’t crazy to think that in a few years the Permian could be out-producing Saudi Arabia’s massive Ghawar oilfield. It would have been crazier in 2007 to suggest that the Permian would be closing in on four million BPD at the end of 2018.

So, never say never — although oil prices and available logistics will have a big impact on how it all pans out.

By Robert Rapier

OilPrice



12 Comments on "The World’s Most Productive Oil Field"

  1. Dredd on Sat, 5th Jan 2019 8:31 am 

    The world’s most productive ice sheet (On Thermal Expansion & Thermal Contraction – 40).

  2. Cloggie on Sat, 5th Jan 2019 9:30 am 

    Peak oil supply, yawn.

  3. GetAVasectomyDudeLifeSuckAdd on Sat, 5th Jan 2019 9:33 am 

    I said many times to watch social unrest in Western nations as an indicator of peak oil and energy decline. I also said to watch for race war and battle between the race for the power.

    That have arrested Drouet in France and transform him into a martyr. Look at him carefully, he is not White of ancestral origin, he is Arab. See video below. Typical Arab, he wants to use women as shield.

    https://www.youtube.com/watch?v=laBdaeHM5pM
    Jump to 3:33 for a better picture of him.

    Here is another Arab talking into the media about France protest.

    https://www.youtube.com/watch?v=ulsC-_3C4Nk

    Arab people are tying to push Whites people out of power in France and take the power for themselves. The Arabs are trying to install Sharia in France.

    So funny to see that French politician will be killed by Arab. So funny to see Whites people pushing Arab migration into Western nations. It will be funny to see Macron kill by Arab people.

    Yeah, we have reached peak energy (Joule) and probably on the down slop of the energy curve.

  4. Aire on Sat, 5th Jan 2019 9:34 am 

    Peak ‘able to continue getting’ oil, Clog

  5. Cloggie on Sat, 5th Jan 2019 9:47 am 

    “I also said to watch for race war”

    There isn’t going to be a “race war”, but if there is going to be a war, it will be a war between left and right, between globalists and nationalists, between “commies” and “natzies”.

    If there would be a “race war”, the whites would win with “2 fingers in the nose”…

    http://blogimages.bloggen.be/wielrennen50plus/2405304-1ed6c9ecd67601aa97cc25500a19b846.JPG

    …but that is not going to happen, since many whites are on the side of the borderless globalists. And yes, the nationalists will be in great majority white, but even they will find an occasional black guy, willing to put on a 1776-tshirt in front of the camera’s.

  6. Cloggie on Sat, 5th Jan 2019 9:54 am 

    This is America: eating spaghetti from under a burka:

    https://www.infowars.com/congresswoman-flees-from-reporters-asking-about-impeach-the-motherfuker-comment/

    [1:58]

    To the credit of the burka, you no longer need to bring in a napkin.

    New female Islamic representative of the demonic party wants to “impeach the mother f*cker” (that would be the legally elected president Donald J. Trump)

  7. Coffeeguyzz on Sat, 5th Jan 2019 6:15 pm 

    Again, Rapier STILL mischaracterizes the latest USGS assessment.

    Combining the 2016/2017 Wolfcamp and Spraberry numbers of 24 Billion barrels oil TRR in the MIDLAND sub basin with the recent 46 billion barrels from the DELAWARE SUB BASIN GIVES AN OVERALL TRR of over 70 BILLION BARRELS OF OIL.

    There are ADDITIONAL sub basins in the Permian that have yet to be added into the above.

  8. Duncan Idaho on Sat, 5th Jan 2019 6:31 pm 

    The Permian is light shale oil, for the most part.
    Comparing it to Ghawar is rather humorous.
    The US can’t refine most of it, and it has to be blended, or sent offshore.
    And the US is not building new refineries– they can do the math.
    Good for gasoline, but almost diesel free.
    The world runs on diesel.

  9. Go Speed Racer on Sat, 5th Jan 2019 10:57 pm 

    Like Mr. Idaho said.
    Permian is a reservoir of natural gas, propane, and paint thinner.

    If U want some oil, better send an aircraft
    carrier over to Ghawar, and take from there.

  10. Anonymous on Sat, 5th Jan 2019 11:08 pm 

    Ghawar oil is mid 30s gravity and over 1% S. Permian is averaging in low 40s and well under .5% S.

    Oil tends to follow a parabola shaped price wrt gravity. 40-45 is ideal. Lower than 40 is worse price and higher than 45 is worse.

    So basically, WTI is more valuable than Ghawar.

  11. makati1 on Sun, 6th Jan 2019 12:16 am 

    Look at who authored this “what if & maybe” ad for big oil. Keep the suckers on board until the last drop of blood is drained from their skinny bodies. LOL

  12. rockman on Mon, 7th Jan 2019 3:24 pm 

    Anony – Save your breath: too many hear lack the clarity to debate the actual facts that represent the total dynamics of US oil production, consumption and refining. Just another group of the blind trying to describe the entire world based upon that particular part of the elephant they are touching.

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