http://business.financialpost.com/
Amid concerns in Canada over the resilience of the U.S. shale industry, one region presents a particularly imposing figure: the Permian Basin of West Texas and southeast New Mexico.
Major producers have continued to refocus their operations around the low-cost Permian as prices remain locked in the low-US$50 range. Oil prices on Friday stood at US$53.42, paring recent gains during the week on fears that U.S. producers continue to pump out higher volumes of crude, in effect neutralizing OPEC’s bid to raise prices by curbing oil supplies. A significant portion of growing U.S. oil production is expected to come from its shale fields, and in particular the Permian Basin.
Production there is expected to reach 2.5 million barrels per day by the end of 2017, up from roughly 2.1 million bpd today, according to estimates by Sam Burwell, an analyst with Canaccord Genuity Inc. based out of Houston. If prices remain approximately at today’s levels, that number could reach three million bpd by the end of 2018—a nearly one million bpd jump in two years.
There is plenty of room for that figure to keep growing. In November the U.S. Geological Survey (USGS) released a report that estimated around 20 billion barrels of undiscovered, technically recoverable oil in the Permian’s Wolfcamp shale region alone.
Permian production growth is at the centre of wider fears that prices may not realize the expected boost from OPEC’s output agreement signed late last year.
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