The U.S.’s most productive shale oil formation, nestled in western Texas, is on track to double its output in the next five years, according to a new report.
The Permian basin churns out nearly 3 million barrels of crude oil a day, which could double by 2023, the International Energy Agency (IEA) reported. IEA expects Permian oil output to lead U.S. production growth.
“What’s amazing about the Permian is how quickly the narrative has changed,” said Steve Everley, spokesman for Texans for Natural Gas.
“Fifteen years ago it was considered a declining field where costs would keep rising,” Everley told The Daily Caller News Foundation. “Today the Permian Basin is one of the lowest-cost fields in the world, and the region produces more oil than all but a handful of OPEC members.”
IEA projects global oil production capacity to hit 107 million barrels per day by 2023, growing at an annual pace of 6.4 million barrels a day. The lion’s share of that growth is expected to come from the U.S.
“The folks who bet against the Permian were effectively betting against technology and innovation, and they lost big,” Everley said.
U.S. oil production growth “is led by the Permian Basin, where output is expected to double by 2023,” IEA reported. The U.S. is expected to overtake Russia as the world’s largest oil producer, which is good news for the Trump administration’s “energy dominance” agenda.
The Trump administration has rolled back energy regulations they saw as keeping the U.S. from reaching its full potential. The White House is also pushing to open more federal lands and offshore areas to oil and gas drilling.
But gains from offshore and federal lands production is expected to be dwarfed by Permian output. That’s partly because of geology and more regulatory hurdles companies have to jump through to drill on federally-controlled lands.
The Permian is so productive because there are several layers of resource-rich rocks. Oil and gas drillers call this type of shale formation “tiramisu” because of how productive it can be, consisting of several types of shale.
The U.S. Energy Information Administration (EIA) reported in February the “[t]hree major tight oil plays in the Permian Basin—the Spraberry, Bone Spring, and Wolfcamp—accounted for 36% of U.S. tight oil production in 2017.”
“Production from these three plays is projected to increase and to account for 43% of cumulative tight oil production through 2050,” EIA projected for 2050. The Bakken and Eagle Ford shale formations are projected to account for 20 percent and 17 percent of tight oil output, respectively.