Source: Chesapeake Energy.
Posted on 06/10/2014 9:17:23 PM PDT by ckilmer
June 10, 2014 | Comments (0)
Source: Chesapeake Energy.
Drilling down into the Permian Basin
While the Permian Basin is one of America's oldest and most prolific oil basins, its best days could lie ahead. According to leading Permian Basin driller Pioneer Natural Resources (NYSE: PXD ) , the Spraberry and Wolfcamp Shale formations in the Permian Basin represent the largest oil field in America, and one of the biggest in the world. As the following slide notes, the field holds an estimated 75 billion barrels of recoverable oil and gas.
Source: Pioneer Natural Resources.
As that slide notes, the Permian Basin holds nearly three times the recoverable oil and gas resources as the Eagle Ford Shale, which is Chesapeake Energy's primary oil growth play. It's that oil-rich prize McClendon is after.
What's truly remarkable about the Permian Basin is just how much oil potential it possesses. Just last year, Pioneer Natural Resources estimated that the industry would recover 50 billion barrels of oil equivalent from the field. However, after another year's worth of horizontal drilling data, the company was able to substantially increase its estimate.
Looking ahead, Pioneer Natural Resources sees these two shale plays providing substantial growth for the industry. As the following slide shows, the company sees horizontal oil and gas production growing from a near flat start of less than a million barrels per day to upwards of 3.2 million barrels of oil per day in 10 years.
Source: Pioneer Natural Resources.
That growth will fuel substantial production and cash flow growth for Permian Basin-focused drillers. In fact, Pioneer Natural Resources sees the play doubling the company's production from 2013 levels by 2018.
Pioneer Natural Resources is not the only company that sees its production doubling over the near term. Smaller Permian Basin-focused driller Concho Resources (NYSE: CXO ) recently made the decision to accelerate its drilling program to take advantage of its large acreage position in the Permian Basin. That new plan has Concho Resources on pace to double its production from 2013 levels by 2016. It's a similar theme with drillers all throughout the basin as horizontal drilling is turning out to be the game-changer that's reviving this legacy oil basin and turning it into an exciting oil growth play.
Oil is a globally, fungible commodity. We import nearly as much of it as we produce ourselves.
When taken together, we are just reaching the break even point from being a net importer.
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thanks that clarifies it. and sharply drawn too.
And the ease with which you source these EIA graphs suggests you have been referencing them for more than 1 year. Correct?
Note the first graph is essentially refinery output, gasoline, diesel, jet fuel, etc. The second includes natural gas liquids and the like.
The bottom graph is not bottomed out, it is climbing.
2012 = 18,490
2013 = 18,887
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttupus2&f=a
The top graph has started to climb as well, but not as much. Petroleum demand, with and without natural gas liquids, has begun to climb again in the US.
2012 = 16,161
2013 = 16,318
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mtpupus2&f=a
That chart stops short of the last 18 months or so, where growth has begun. It also is including natural gas liquids as oil.
more than 1 decade...
The upper graph has it in decline whereas the bottom graph has leveled out.
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The meaning here is that the use of oil as a transportation fuel is still in relative decline—albeit the rate of decline has slowed recently.
The upper graph has it in decline whereas the bottom graph has leveled out.
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The meaning here is that the use of oil as a transportation fuel is still in relative decline—albeit the rate of decline has slowed recently.
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thackney: whoops just saw your last post which does a better job.
No, take out the seasonal swings and you will more clearly see we have started to increase.
Gasoline:
2012 = 8,682
2013 = 8,774
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus2&f=a
On-Road grade diesel
2012 = 3,440
2013 = 3,553
U.S. Product Supplied of Distillate Fuel Oil, 0 to 15 ppm Sulfur
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=md0up_nus_2&f=a
Jet Fuel
2012 = 1,398
2013 = 1,419
U.S. Product Supplied of Kerosene-Type Jet Fuel
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mkjupus2&f=a
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