Leading the pack in the Permian are Devon Energy Corp., Concho Resources, Pioneer Natural Resources and Chevron, with Wolfcamp probably the key focus of development activities, and the leading formation in terms of production increases. Devon in particular is being singled out by analysts for its large acreage in the Permian, couple with its transformative turnaround that could render it one of the largest crude oil producers in the US.
The only challenge with the Permian-which is on trend to see continual increases in production-is the pipeline takeaway capacity, according to RBN Energy. "The bottom line is that crude oil production in the Permian is growing rapidly, and today there is not enough pipeline takeaway capacity to efficiently handle the volume", but that should correct itself soon with new pipelines coming online.
Bloomberg quoted Bruce Carswell, West Texas operations manager for Iowa Pacific Holdings, as saying that the forecast through July is that volumes are going to continue to move out of the region by rail.
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The Permian Basin Petroleum Index, put out by Amarillo economist Karr Ingham, which examines several industry metrics to measure the health of the oil and gas business in the region, was almost 10 percent higher in May than a year earlier.
Regardless of pipeline capacity, Permian Basin crude is shaping up to be the next big oil boom thanks to new technology. Eagle Ford and Bakken became economical only after being drilled horizontally, so with the final shift to dominate horizontal drilling in the Permian, the game has only just begun.
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