--> --> Three Formations Are Responsible for Surge in Permian Basin Crude Oil Production. U.S.A. EIA Expects Permian Region Oil Production to Reach Record High in 2018

2018 AAPG International Conference and Exhibition

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Three Formations Are Responsible for Surge in Permian Basin Crude Oil Production. U.S.A. EIA Expects Permian Region Oil Production to Reach Record High in 2018

Abstract

The Permian Basin in Texas and New Mexico is the nation's most prolific oil producing area. Six formations within the basin have provided the bulk of Permian's 180% increase in oil output since 2007. Crude oil production in the Permian Basin has increased from a low point of 0.85 Million barrels per day (MMbbl/d) in December 2007 to 2.38 MMbbl/d in March 2018. Largely as a result of this growth, crude oil production from Permian Basin counties has exceeded production from the federal offshore Gulf of Mexico region since March 2013, making the Permian the largest crude oil producing region in the United States. In 2017, the Permian Basin accounted for 20% of total U.S. crude oil production. The recent increase in Permian crude oil production is largely concentrated in six low-permeability formations that include the Wolfcamp, Spraberry, Bone Spring, Glorieta, Yeso, and Delaware formations. Production from these formations has helped drive the increase in Permian oil production—particularly since 2009—despite declining production from legacy wells. Almost 95% of the increase in Permian crude oil production came from the Wolfcamp, Spraberry, and Bone Spring formations. Production from these three formations collectively increased from about 0.14 MMbbl/d in December2007 to an estimated 2.3 MMbbl/d in March 2018. Three other formations—the Delaware formation and the adjacent Glorieta and Yeso formations—also increased production from 2007 to 2018, but to a lesser extent. The Permian Basin region encompasses an area approximately 250 miles wide and 300 miles long, and it contains many potentially productive low-permeability oil formations. Although oil production has previously come from the more permeable portions of the Permian formations, the application of horizontal drilling and hydraulic fracturing has opened up large and less-permeable portions of these formations to commercial production. In 2018, EIA expects crude oil production to reach an average of 10.4 MMbbl/d, which would surpass the previous record of 9.6 million b/d set in 1970. EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight formations within the Permian region in Texas and from the Federal Gulf of Mexico. The Permian region is expected to produce 2.9 MM bbl/d of crude oil by the end of 2018, about 0.5 MM bbl/d more than the estimated June 2017 production level, representing nearly 30% of total U.S. crude oil production in 2018.