At­ten­tion on Per­mian Basin grows as oil prices rise

U.S. Ge­o­log­i­cal Sur­vey assess­ment says area could have even greater pro­duc­tion po­ten­tial

Santa Fe New Mexican - - LOCAL & REGION - By Su­san Mon­toya Bryan

AL­BU­QUERQUE — Some of the largest en­ergy com­pa­nies in the U.S. have al­ready in­vested bil­lions of dol­lars on claims up and down the Texas-New Mex­ico state line, tap­ping one of the na­tion’s rich­est and most pro­lific oil and nat­u­ral gas re­gions.

Now the stakes just got higher, as the U.S. Ge­o­log­i­cal Sur­vey re­leased a new assess­ment Thurs­day that shows por­tions of the Per­mian Basin could hold even more prom­ise.

With the po­ten­tial to dou­ble the na­tion’s on­shore oil and gas re­sources, the agency es­ti­mates more than 46 bil­lion bar­rels of oil and some 280 tril­lion cu­bic feet of gas are within two for­ma­tions on the south­west­ern side of the basin. That’s the largest con­tin­u­ous oil and gas re­source po­ten­tial ever as­sessed.

While agency ge­ol­o­gists cau­tion that more study would be needed to de­ter­mine the prof­itabil­ity of go­ing after the re­sources, in­dus­try groups and top of­fi­cials within the Trump ad­min­is­tra­tion are en­cour­aged and say the assess­ment un­der­scores the ac­tiv­ity that’s al­ready hap­pen­ing in the basin.

“Be­fore this assess­ment came down, I was bullish on oil and gas pro­duc­tion in the United States,” In­te­rior Sec­re­tary Ryan Zinke said in a state­ment. “Now, I know for a fact that Amer­i­can en­ergy dom­i­nance is within our grasp as a na­tion.”

The an­nounce­ment comes as OPEC coun­tries voted Fri­day to cut oil pro­duc­tion be­gin­ning next year as a way to force crude oil prices higher de­spite po­lit­i­cal pres­sure from Pres­i­dent Don­ald Trump. The group of oil-pro­duc­ing na­tions was look­ing to rein in sup­ply as prices had fallen about 25 per­cent be­cause ma­jor pro­duc­ers, in­clud­ing the U.S., have been pump­ing at high rates.

Pro­duc­ers through­out the Per­mian were closely watch­ing Fri­day’s de­vel­op­ments, and there were no in­di­ca­tions of things slow­ing down in the oil fields.

Stephen Robert­son, ex­ec­u­tive vice pres­i­dent of the Texas-based Per­mian Basin Pe­tro­leum As­so­ci­a­tion, said the signs for the basin’s po­ten­tial have been there for a long time.

“The fact is that Reeves County, which in the heart of that play, is run­ning more rigs than any other county in the na­tion and has been do­ing that for quite a while,” he said. “The peo­ple out here know that it’s there and it re­ally is that im­prove­ment of the tech­nolo­gies and the in­creased ef­fi­cien­cies al­low­ing peo­ple the abil­ity to ac­tu­ally be able to ac­cess it and pro­duce it.” Still, a main fac­tor is price. “If the price drops to a point where it’s not eco­nom­i­cal, then it doesn’t mat­ter if it’s there. It’s not go­ing to be pro­duced,” Robert­son said.

New Mex­ico’s share of the Per­mian Basin has helped to drive pro­duc­tion in the state to record lev­els in 2017. This year is ex­pected to be an­other ban­ner year as in­dus­try of­fi­cials say the state is on pace to sur­pass 200 mil­lion bar­rels.

The flurry of ac­tiv­ity in south­east­ern New Mex­ico has put pres­sure on ev­ery­thing from hous­ing and schools to high­way in­fra­struc­ture. Con­cerns also have been raised by state Land Com­mis­sioner Aubrey Dunn about the en­vi­ron­men­tal im­pacts as state and fed­eral reg­u­la­tors have had a dif­fi­cult time keep­ing up with the pace of de­vel­op­ment across the re­gion.

Dale Jan­way, mayor of Carls­bad, told the As­so­ci­ated Press that with the news of more re­sources in the Per­mian comes greater re­spon­si­bil­ity.

“We know that we need to re­dou­ble our ef­forts to im­prove and de­velop in­fra­struc­ture in the area and to work closely with the county, state and our busi­ness part­ners to best pre­pare for the fu­ture. We’re in it for the long haul,” he said.

The boom also has re­sulted in a sig­nif­i­cant bud­get sur­plus that will give in­com­ing Gov.-elect Michelle Lu­jan Gr­isham and the Demo­crat-led Leg­is­la­ture more op­tions as they hash out spend­ing pri­or­i­ties for ev­ery­thing from ed­u­ca­tion and pub­lic safety to in­fra­struc­ture.


An oil rig and pump jack op­er­ate in Oc­to­ber along a road­side in Mid­land, Texas. With more bar­rels of oil be­ing pumped monthly from the Per­mian Basin, New Mex­ico is among the na­tion’s top pro­duc­ing states.

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