The Permian Basin led America to energy independence with the shale revolution. Since then, the United States has become the top oil and natural gas producer in the world. In 2019, the Permian Basin, stretching through Texas into New Mexico, became the highest producing oil field in the world. Fast forward a year, COVID-19 took aim at the world and knocked global economies to their knees. The energy industry was not immune, even seeing negative market numbers for the first time. Now economies, both here and abroad, are again showing signs of life, and the fossil fuel industry is going to be there to keep it running, and at the front of the pack is the Permian Basin and the Eagle Ford Shale.
Restarting Parsley Energy
Parsley Energy has announced it will be restarting most of the wells it shut last month due to lack of demand. In May, they reduced their output by 26,000 barrels per day (bpd); the remainder of the year should see all of those barrels returned to production. Parsley Energy, you will remember, along with Pioneer Natural Resources were the companies that in March at the beginning of the COVID crisis wanted the Texas Railroad Commission (RRC) to consider implementing prorationing. Prorationing, a method of rationing the amount of oil and natural gas each Texas company is allowed to produce, had not been used by the RRC since the 70s. After spending hours listening to dozens of witnesses, the RRC ultimately decided prorationing would not happen for three main reasons: No one is around now who had done it before, money, and time. The third reason most likely was the biggest obstacle. The economy tends to right itself, and probably the industry would be back on its feet by the time the RRC was anywhere near ready to implement prorationing. Signs are looking good that the industry could be past the crisis point as soon as the end of July. To hear more on this listen to the latest In the Oil Patch radio show.
Restarting EOG Resources
EOG Resources is one of the largest crude oil and natural gas exploration and production companies in the U.S., and they are the largest oil producer and acreage holder in South Texas’ Eagle Ford Shale. Starting next month, they are planning to not only restart 200 wells in the Eagle Ford, but also to “bring on wells that were completed and not turned on yet,” said Kenneth Boedeker, EOG’s head of exploration and production.
Permian and Eagle Ford: Keeping the World Moving
As part of a CERAWeek conversation by IHS, Markit ConocoPhillips Chairman and Chief Executive Officer Ryan Lance said the company is considering bringing production back as the market environment is strengthening. “We’ve got about a third of our production shut-in as a company—400,000 b/d. But we see some strengthening in the market so we are in the process of thinking about under what circumstances should we start coming back into the market and then start selling our product… I would say we’re probably thinking of slowly coming back into the market over the next few months and reducing the amount we’ve got curtailed because we’re seeing some strengthening in the price.”
As the economy and travel increase we can look with confidence toward the Permian and Eagle Ford Shale to keep the world moving.