Permian Basin will drive record U.S. production in 2018

By Patrick C. Miller | January 02, 2018

Calling the Permian Basin one of the most prolific in history, IHS Markit expects the basin’s production to hit a second peak in 2017, shattering the 1973 record by more than 25 million barrels.

The London-based research and analysis firm says the surge in Permian production is projected to push total U.S. liquids production to a new all-time high. IHS Market expects production to exceed 10.5 million barrels per day by year’s end.

“The magnitude of the rebound in Permian Basin liquids production is unprecedented,” said Reed Olmstead, director of HIS Markit energy research and analysis. “Not so long ago, many in the industry were saying the Permian was dead, but the Phoenix has again risen from the ashes and is soaring to new heights.”

The Permian is projected to add more than 2 million barrels per day in new production since 2007, he said. By the end of 2017, the record production of 2.16 million barrels per day set in 1973 will be surpassed at 2.75 million barrels per day, Olmstead said. The surge should push U.S. liquids production to a new all-time high by year’s end.

“We see U.S. production exceeding 10.5 million barrels per day by the end of 2018,” he added.

According to the IHS Markit U.S. Energy Well and Production database, peak annual liquids production for the Permian Basin during 1973 was nearly 790 million, an average of nearly 66 million barrels of oil per month. Peak-month liquids production in the Permian during 1973 occurred in September, with slightly more than 68 million barrels produced.

By mid-year 2017, average monthly production already exceeded the best month of Permian production during the former peak year of 1973. For 2017 year-to-date through July, Permian liquids production exceeded 484 million barrels, or an average of slightly more than 69 million barrels per month.

Pete Stark, HIS Markit executive director of upstream research, said, “The significance of this second production peak cannot be overstated, since it truly revived a basin, and in many ways, the U.S. E&P industry. When we consider the impact on the world’s crude markets, the Permian has to be considered a global disrupter.”

IHS Markit believes the Permian Basin is of such significance to the global oil and gas industry that the basin is the model the company uses as the benchmark for its ongoing research study entitled, “Super Basins: The Basins that Keep on Giving Analysis.” Researchers identified more than onshore 25 “super basins” with multiple reservoirs and source rocks, diverse play types across numerous geologic horizons, infrastructure with access to markets. and established service sector and supply chains.