10 Mar 2014 More

Oil Drilling in the US Just Getting Warmed Up

posted by Unknown @ 14:01 0 Comments

Oil drilling in action
Everyone in the business knows that the US oil boom is in full swing.  But full swing or not, still most experts agree that oil drilling in America is still just getting started.  The total number of drilling rigs in the US skyrocketed last week to 1443.  That’s the highest it’s been since 1987.  1987 is the first year that separate rigs started being counted.

Last week the surge came from the Permian Basin in West Texas.  Even though the region has been in production since 1921, still according to most experts its best days are yet to come.

Major players like Concho Resources and Pioneer Natural Resources are only just beginning to ramp up production in the Permian through the use of horizontal drilling.  The rig count in the region has now increased by 10 to 265.  That’s the highest total since 2011.

Pioneer Natural Resources and the Spraberry/Wolfcamp formations

Of all the companies now drilling in the Permian Basin, more specifically the Spraberry/Wolfcamp formations, Pioneer Natural Resources is leading the way.  Already pioneer is the second largest producer in all of Texas, but as far as horizontal drilling goes, it’s just getting its legs in these new formations. 

Think about this: so far the company has drilled 7000 vertical wells.  While that is impressive, it sees itself drilling more than 20,000 horizontal wells in the years to come.  Horizontal drilling can get to resources not so easily accessible by traditional vertical drilling.

Pioneer says it expects to increase its total number of horizontal rigs from 5 in 2013 to 16 by the end of the first quarter 2014.  That’s a huge increase in a very short period of time.

Concho Resources also ramping-up operations

Not to be left behind, Concho Resources has also begun ramping up production in the region as well.  So far the company says it has identified more than 22,000 horizontal drilling locations. That’s double the amount estimated back in 2012.  The company believes it can double its output by the end of 2016.

Other players in the basin

Pioneer and Concho are not the only major players in the basin.  Both Devon Energy and Apache say that the Permian is a big part of their futures as well.  While both companies are well situated outside the region, still it will play a major role in new developments moving forward.

For Devon, production in the Permian Basin has already more than doubled since 2011.  Future growth is expected to be robust.  A 3-pronged strategy includes further E&P in the Permian as well as the Eagle Ford Shale play and the Canadian oil sand region. 

Apache sees the Permian as a major vehicle for growth as well.  Apache is already one of the top players in the region, seeing its rig count growing from 6 to 39 since 2010.  The company already has a 1.7 million acre position in the basin and estimates net resource potential at 4.8 bboe.

As oil exports from the US continue to rise, it only helps America in its quest for energy independence.  While the numbers are staggering already, most experts believe it is just the beginning.

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