Permian Basin Power Surge
Authors: Presley Jennifer 
Published: January 2023

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Like its salty neighbor to the east, the Permian Basin of west Texas and southeastern New Mexico has been proclaimed dead on many occasions. Such proclamations of their demise, however, are mere exaggerations as the Gulf of Mexico and the Permian Basin continue to thrive.
These historic oil and gas production powerhouses have delivered to global markets billions of barrels of oil and trillions of cubic feet of natural gas over the past century. Through the booms and the busts, the resiliency of each was made possible by the combination of ingenuity and perseverance and by advancements in techniques and technologies.
Specifically, the Permian’s unconventional resources were “opened by the confluence of two major technologies—horizontal drilling and hydraulic fracturing—more than a decade ago. And since then, we have not stopped,” Nicole Champenoy, director of Chevron’s shale and tight-asset class division, said at the recent SPE Permian Basin Energy Conference (PBEC) held in Midland, Texas.
“From incredible advances across the board—from completions optimization to execution efficiencies where one rig today is doing the work of three rigs from several years ago—the list goes on and on. We did that in a decade. The innovation and technology we have deployed has been remarkable,” she said.

Growth Engines
The basin’s remarkable success occurred in a decade that saw more than one market downturn and was capped off with a crude-oil supply glut eliminated by the global COVID-19 pandemic.
Before the widespread pandemic-related closures began, the Permian produced 4.9 million B/D in March 2020, with production a year later dropping to 3.6 million B/D in February 2021, according to the US Energy Information Administration (EIA) data.
Two years later, in March 2022, production finally shattered the 5 million B/D mark just as the world began to emerge from the pandemic.
In November production in the region stands at more than 5.4 million B/D, according to the EIA’s Drilling Productivity Report.
The Permian continues its reign as the largest oil-producing region in the US, with the Eagle Ford of south Texas and North Dakota’s Bakken plays coming in at 1.2 million and 1.1 million B/D, respectively. As for natural gas, the Permian produced more than 21.2 MMcf/D, second only to the Appalachia region’s production of 35.4 MMcf/D, per the EIA data.
The US is on track to produce 11.8 million B/D in 2022, with that number growing to 12.3 million B/D in 2023, according to the EIA’s Short-Term Energy Outlook.
Much of that oil will likely come from the Permian. In June 2022, the basin accounted for about 43% of US crude oil production and 17% of US natural gas production, the EIA said.
“When we talk about the growth engines of the US hydrocarbon system, they are the Permian’s Midland and Delaware basins,” Chris Paulsen, vice president of business development and strategy for Pioneer Natural Resources, told PBEC attendees. “Everything else for the most part of the US is nominally increasing and not declining in terms of gas production.”
He noted that it will be interesting to see how the growth trajectory plays out with companies pulling back on spending, citing concerns over ESG, free cash flow, and capital efficiency as inflation takes root.
But he does see several positives that will help moving forward.
“We’ve gone from standalone developments, growth at all costs, and a lot of urgency to people standing back and thinking about how to best complete reservoirs to ensure we’re not leaving behind hydrocarbons,” he said.