Permian basin oil production to more than double from 2017 - 2023
Published by Elizabeth Corner,
Oil production in the Permian Basin, already a major force in global supply growth, will rise nearly 3 million bpd by 2023 – a level of growth exceeding most recent estimates, a new outlook by business information provider IHS Markit says. What the report describes as a “stunning” level of growth will comprise more than 60% of net global production growth during that timeframe.
Total oil production in the Permian will be 5.4 million bpd in 2023, more than the total production of any OPEC country other than Saudi Arabia. Nearly 41 000 new wells and US$308 billion in upstream spending between 2018 - 2023 will drive that growth.
Production of both natural gas and natural gas liquids (NGLs) in the Permian are also expected to double during this period, reaching 15 billion ft3/d and 1.7 million bpd, respectively.
“In the past 24 months, production from just this one region – the Permian – has grown far more than any other entire country in the world,” said Daniel Yergin, Vice Chairman, IHS Markit. “Add an additional 3 million bpd by 2023 – more than the total present-day production of Kuwait – and you have a level of production that exceeds the current production of every OPEC nation except for Saudi Arabia.”
The new IHS Markit Permian production outlook draws on information from the company’s proprietary Performance Evaluator database – which includes detailed information of more than one million wells globally – along with the combined analysis of IHS Markit experts covering global crude markets, North American gas, midstream and infrastructure, costs, natural gas liquids and company research.
Despite the US$308 billion price tag – well above the US$150 billion spent from 2012 to 2017 – access to capital will not be the primary challenge for Permian production in coming years. Among other factors, the outlook expects wells to operate with positive cash flow, unlike prior years.
The outlook anticipates a market where oil prices stay around US$60/bbl or higher. In that price scenario, it is lags in necessary infrastructure, rather than the availability of upstream investment, that represents the greatest potential challenge, the report says.
“The infrastructure challenges in the Permian illustrate a fundamental mismatch between upstream oil producers and midstream players,” said Jim Burkhard, Vice pPresident and head of crude oil markets at IHS Markit. “The former are focused on fast growth while the latter require sustained high utilisation of infrastructure over decades for projects to be viable.”
The IHS Markit Permian production outlook factors in the assumption that some logistical bottlenecks will occur, causing some wells to be deferred to the latter half of 2019 for instance. The Permian’s robust production growth is expected even with such constraints.
“Far from a ‘best case’ forecast the IHS Markit outlook applies realistic scenarios and anticipates likely bottlenecks,” said Raoul LeBlanc, Executive Director and head of the IHS Markit Performance Evaluator. “That the outlook still expects the Permian to exceed existing (and already lofty) expectations speaks to the region’s unique and growing prominence to the world oil market. The level of growth—from 0.92 million bpd in 2010 to 5.4 million bpd in 2023—is truly stunning.”
Read the article online at: https://www.worldpipelines.com/business-news/18062018/permian-basin-oil-production-to-more-than-double-from-2017--2023/
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