Permian Basin oil production expected to have major increase by 2023
Oil production in the Permian Basin will rise nearly 3 million barrels per day (mbd) by 2023 according to a report by IHS Markit (Nasdaq: INFO). Total oil production in the Permian will be 5.4 mbd in 2023, more than the total production of any OPEC country other than Saudi Arabia. Nearly 41,000 new wells and $308 billion in upstream spending between 2018 to 2023 will drive that growth. Production of both natural gas and natural gas liquids (NGLs) in the Permian are also expected to double during this period, reaching 15 billion cubic feet per day (bcf/d) and 1.7 mbd, respectively.
"In the past 24 months, production from just this one region-the Permian-has grown far more than any other entire country in the world," said Daniel Yergin, vice chairman, IHS Markit. "Add an additional 3 mbd by 2023-more than the total present-day production of Kuwait-and you have a level of production that exceeds the current production of every OPEC nation except for Saudi Arabia."
Despite the $308 billion price tag, access to capital will not be the primary challenge for Permian production in coming years. The outlook anticipates a market where oil prices stay around $60 per barrel or higher. In that price scenario, it is lags in necessary infrastructure, rather than the availability of upstream investment, that represents the greatest potential challenge, the report says.
"The infrastructure challenges in the Permian illustrate a fundamental mismatch between upstream oil producers and midstream players," said Jim Burkhard, vice president and head of crude oil markets at IHS Markit. "The former are focused on fast growth while the latter require sustained high utilization of infrastructure over decades for projects to be viable."
The IHS Markit Permian production outlook factors in the assumption that some logistical bottlenecks will occur, causing some wells to be deferred to the latter half of 2019 for instance. The Permian’s robust production growth is expected even with such constraints.
Raoul LeBlanc, executive director and head of the IHS Markit Performance Evaluator, said, "That the outlook still expects the Permian to exceed existing expectations speaks to the region’s unique and growing prominence to the world oil market. The level of growth-from 0.92 mbd in 2010 to 5.4 mbd in 2023-is truly stunning."
– Edited by CFE Media. IHS Markit is a CFE Media content partner.