Thursday , July 29 2021

Permian oil reserves may be twice as large as we thought



The US Geological Survey revised the technically recoverable reserves in the Wolfcamp Basin in the Permian Shale Game to 46.3 billion barrels of crude oil and 281 trillion feet of natural gas. That's 20 billion barrels of crude oil and 16 trillion cubic feet of gas in recoverable reserves by the end of 2016.

It is worth noting, however, that the new estimate also includes the formation of Bone Spring that is part of the Delaware Basin in the Permian. This is the first time that this training is included in the USGS 'assessment of oil and gas reserves.

Recoverable reserves are calculated based not only on exploration and geology results, but also on the price level that makes oil and gas commercially viable for extraction. The USGS conducted its review earlier this year, so it should have reflected the improvement in oil prices, notably West Texas Intermediate, which has largely disappeared, sparking concerns about the sustainability of production growth, which has been stable throughout the year.

The national total reached 11.7 million bpd last month, a record and also the highest in the world, and the Permian was the biggest driver of this growth. It is the shale game that produces the most oil and also has the fastest rate of output growth: Permian in November yielded 3.63 million bpd of crude oil and the Energy Information Administration expects this increase to rise to 3,695 million from bpd this month.

Then the Permian is already a star, but now it will shine more brightly. The USGS numbers mean it is the largest single oil and gas reservoir in the United States and one of the largest on a global scale. Related: US becomes oil exporters for the first time in 75 years

The Albuquerque newspaper quoted the head of the state's Oil and Gas Association as saying, "Even for someone who understands the resources and potential of the Permian Basin, I can not help but be astonished at the enormous enormity of what the USGS reported. Ryan Flynn added: "The Permian resources shared by New Mexico and Texas make this area one of the most important places in the world in terms of oil production."

While this is true, this race for the Permian, aptly named Permania, has led to some problems, namely price discounts, as there are not enough pipelines to take the product to refineries and export markets. However, these problems are already being resolved and Permania seems to only intensify unless prices fall below $ 50 a barrel for the WTI.

By Irina Slav for Oilprice.com

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