The Permian Basin – By the Numbers
Mon, July 16, 2018
The Permian Has Massive Oil & Gas Resources
In November 2016, a U.S. Geological Survey (USGS) assessment of West Texas’ Wolfcamp Shale formation estimated the region holds 20 billion barrels of recoverable oil, the “largest estimate of continuous oil” that the agency had ever assessed in the United States. Another USGS assessment released just last year found that the undiscovered oil resources in the Spraberry Formation of the Permian holds an estimated 4.2 billion barrels of oil – 700 percent larger than previously thought.
But the Permian isn’t just about oil. According to USGS, the Wolfcamp Shale also holds an estimated 16 trillion cubic feet of associated natural gas and 1.6 billion barrels of natural gas liquids. The Spraberry Formation is estimated to hold 3.1 trillion cubic feet of undiscovered natural gas resources.
The Permian Is Delivering Record-Breaking Oil and Gas Production
The Permian isn’t just America’s top oil producer – it’s one of the largest oil fields in the world. According to the U.S. Energy Information Administration (EIA), oil production in the Permian totaled about 3.2 million barrels per day in May. That’s already more than what all but three OPEC countries produced, and EIA predicts oil production will reach 3.35 million barrels per day in July.
The Permian also produced about 10.5 billion cubic feet of natural gas daily (Bcf/d) in June, according to EIA, with that number expected to reach roughly 10.7 Bcf/d in July – a 229 million cubic feet per day increase.
Permian Oil and Gas Production Strengthens American Energy Security
The Permian accounts for roughly one-third of all U.S. oil production and roughly 45 percent of all U.S. shale oil production. The Permian also accounts for about 15 percent of total natural gas production from shale, making it the second largest producing natural gas shale region in the United States behind only the Appalachian Basin.
As of the last week of June, the Permian accounted for 474 of the 1,032 total onshore rigs in the United States, according to Baker Hughes. More impressively, the Permian saw an increase of 104 rigs between the last week of June 2017 and the last week of June 2018. At the same time, the United States saw an increase of 109 onshore rigs year-over-year.
In other words, the Permian accounted for about 95 percent of total onshore U.S. drilling rig growth year-over-year.
Massive Production Growth in the Permian Equals Massive Economic Benefits
The Permian is a key driver of Texas’ economy, with development in West Texas spurring economic growth regionally and statewide. In March, it was reported that Midland, Tex., had the state’s lowest unemployment rate at 2.4 percent. Since then, the unemployment rate has dropped even further to 2.1 percent in May, according to the latest data from the U.S. Bureau of Labor Statistics.
“Midland has had job growth of 11 percent in the past 12 months, which is seven times as fast as the rest of the country.”
- Lawrence Yun, chief economist with the National Association of Realtors.
According to the Midland Development Corporation, the Midland-Odessa Regional Economic Index grew to a new all-time record in April of this year, up 23.1 percent from April 2017. The Texas Permian Basin Petroleum Index, an estimate of oil and gas economic activity in the region, grew 28 percent between April 2017 and April 2018. Overall, roughly 14,100 oil and gas jobs have been added to the metro area since the low point in 2016, an increase of 55 percent.
Oil and natural gas development in the Permian provides millions of dollars in tax revenue to local governments throughout the region. For example, Andrews County, on the Western edge of the Permian, received $11.9 million in oil and gas property tax revenue in 2017, making up nearly 58 percent of the county’s total tax base. Other Permian counties, such as Pecos, Ward, and Upton, saw $7.3 million, $9.3 million and $15.9 million in oil and gas property tax revenue last year.
In addition to funding local services, infrastructure and emergency services, oil and gas development provides vital funding to public schools in the Permian. For example, oil and gas property taxes provided $32.5 million in funding for Midland ISD, while Andrews ISD saw $24.5 million in funding from oil and gas property taxes last year.
Recent data from Realtor.com shows Midland, Texas, - located in the heart of the Permian Basin – was the hottest housing market in the country for the second month in a row in June.
Additionally, average monthly home sales recently reached their highest level in a decade, while six-month moving average home prices grew by almost $9,000 between March and April 2018.
America’s most prolific oil and gas basin – the Permian – has brought tremendous opportunities to the Lone Star State, even supplying the fuel needed for a manufacturing renaissance. And with record-breaking production projected to increase, the Permian Basin will ensure America’s role as an energy superpower for years to come.