The Permian Basin has been one of the most prolific petroleum regions in North America, producing oil primarily from Permian- and Pennsylvanian-age carbonate reservoirs. The region is characterized by two distinctly different types of production. One is of long-life oil in shallow formations in the Central Basin platform, typically legacy assets of the U.S. majors under secondary or tertiary recovery. The other production is of deeper gas in the Delaware and Midland basins that can be characterized as low-risk with long-life reserves.
Current basin production is approximately 10.4 billion cubic feet of gas equivalent per day (ranked second in the U.S.) from 118,000 active wells (52% oil).
Proved reserves in the Permian are relatively stable and mostly oil. Resource potential (38 trillion cubic feet equivalent) is less than proved reserves, thus upside is from exploitation of existing plays. Estimated proved reserves are approximately 54.2 trillion cubic feet equivalent (ranked second in the U.S.).
Major fields. In the basin, production from the top 10 fields is dominated by the Spraberry and Grayburg-San Andres. The Grayburg-San Andres is the most prolific producer in the Permian Basin, with cumulative production of 13 billion barrels of oil from more than 500 designated fields and accounting for approximately 45% of all the oil produced in the basin.
Many fields are developed on asymmetrical, northwest-trending anticlines parallel to the eastern margin of the platform and have a significant stratigraphic component (loss of porosity, facies changes). The Spraberry Trend is a large stratigraphic trap approximately 75 miles long and up to 30 miles wide, covering an area of nearly eight counties in the Midland Basin.
Operations, technology, costs. Land in Texas is generally accessible for leasing. However, a significant portion of New Mexico land is under federal control, thus the permitting process can be lengthy.
Operating costs tend to be high in the Permian due to secondary and tertiary recovery operations. Differentials in the Permian Basin are generally quite low; however, distance from market results in slightly higher differentials to spot prices on the Gulf Coast or in the ArkLaTex region.
Distinctly different strategies are being employed in the Permian Basin. Examples are Occidental Petroleum and Pioneer Natural Resources’ large-field exploitation, Kinder Morgan’s CO2 integration, and exploitation and exploration by Apache Corp.
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