This week the United States Geological Survey (USGS) announced a groundbreaking oil and gas discovery in West Texas’ Permian Basin. According to the organization’s recent press release, a whopping 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids are now believed to lie untapped in the Wolfcamp Shale and overlying Bone Spring Formation area of Texas and New Mexico’s Permian Basin.
Major players in the energy industry already have a significant presence in Wolfcamp and Bone Spring, including Occidental Petroleum Corp. and Pioneer Natural Resources Co. It was already well known and well documented that these fields were remarkably fertile grounds for oil extraction, but the jaw-dropping extent of the new figures released this week by the USGS has made the massive crude and shale reserves of the Permian Basin freshly headline-worthy. The figures in this week’s press release are in fact, in the case of Wolfcamp Shale, more than double the previous resource assessment.
The USGS assessed the area more than two years ago in 2016, and has officially determined that it contained the largest estimated quantity of continuous oil in the entire United States. “Christmas came a few weeks early this year,” said U.S. Secretary of the Interior Ryan Zinke in response to these momentous figures. “American strength flows from American energy, and as it turns out, we have a lot of American energy. Before this assessment came down, I was bullish on oil and gas production in the United States. Now, I know for a fact that American energy dominance is within our grasp as a nation.”
The USGS qualifies the figures of their massive discovery as consisting of undiscovered, technically recoverable resources, which they define as, “those [resources] that are estimated to exist based on geologic knowledge and already established production, while technically recoverable resources are those that can be produced using currently available technology and industry practices. Whether or not it is profitable to produce these resources has not been evaluated.”
The continued productivity and massive untapped resources present in the Permian Basin are particularly vital to the United States energy industry, in a time that most shale wells are in steep decline after years of record booms and cheap crude-flooded markets. Now, in addition to this stunning discovery from the USGS, there is even further hope that there are still additional technically recoverable resources lying in wait, yet to be discovered.
Dr. Jim Reilly, the Director of USGS, a facet of the U.S. Department of Interior, highlighted how remarkable the discovery was in the larger context of the industry. “In the 1980’s, during my time in the petroleum industry, the Permian and similar mature basins were not considered viable for producing large new recoverable resources. Today, thanks to advances in technology, the Permian Basin continues to impress in terms of resource potential. The results of this most recent assessment and that of the Wolfcamp Formation in the Midland Basin in 2016 are our largest continuous oil and gas assessments ever released.” Reilly stressed, “Knowing where these resources are located and how much exists is crucial to ensuring both our energy independence and energy dominance.”
Additionally, these discoveries come at a particularly opportune time for West Texas, as a major injection of funding has just been provided toward infrastructure the West Texas area via a federal grant supported by U.S. Senator John Cornyn. The grant, which comes from a program led by the U.S. Department of Transportation’s Better Utilizing Investments to Leverage Development (B.U.I.L.D.) will direct money to infrastructure projects in Winkler, Glasscock and Reagan Counties.
The recent discovery and continued investment in the Permian Basin shows that the industry continues to be bullish in West Texas, and with good reason, despite the volatility of the oil industry as a whole. While other major fields continue to decline in production, the Permian Basin has managed to stay above the fray and certainly shows no sign of slowing.
By Haley Zaremba for Oilprice.com