Sep. 14—Jazzed by strong worldwide demand and crackerjack technology, the Permian Basin will set an all-time record for oil production in October.
That's according to the U.S. Energy Information Administration, which says the Basin's barrels-per-day output will hit 5.413 million next month after cresting up from 5.2 and 5.3 million bpd this summer.
Texas Independent Producers & Royalty Owners Association President Ed Longanecker said Wednesday that the industry "is in the early stages of a long-term up cycle and the Permian Basin will continue to play an important role in meeting growing energy demand.
"Despite some of the challenges facing Texas producers today, short-term oil fundamentals remain very strong," Longanecker said from Austin. "China will inevitably recover from its draconian lockdowns, but the timing will be important.
"Low global oil inventories, the Strategic Petroleum Reserve release winding down, continued geopolitical disruptions and limited growth from OPEC will also contribute to higher commodity prices, which should drive continued production growth in the Basin."
Texas Alliance of Energy Producers President Jason Modglin said this region "continues to be the envy of the world as the most prolific basin.
"This is thanks to the people and producers who have made the right decisions to meet our state and international energy demands," Modglin said Wednesday from Austin. "Texas is better for it and should find opportunities to give back to the region that has given so much with additional funding for roads, education and water infrastructure."
Steve Pruett, CEO of Elevation Resources in Midland and vice chairman of the Washington, D.C.-based Independent Petroleum Association of America, said conditions are generally encouraging, but there are serious problems.
"The Permian Basin's independent oil and gas producers are doing all we can to increase production as we have economic incentives to do so," Pruett said Wednesday.
"However, headwinds caused by skilled labor shortages, supply chain disruptions, service and tubular goods inflation and adverse federal executive and legislative branches and federal agencies charged with curtailing oil and natural gas development will constrain growth in Permian and domestic production.
"Because the industry must first overcome declining rates on existing shale wells, growth beyond six million bpd in the Basin will be difficult with what most operators are signaling to be a flat rig count in the Permian next year," Pruett said.
"While the Permian rig count has grown from a low of 123 active rigs in August 2020 to 346 rigs at the end of August 2022, we are far off the recent peak of 490 rigs active as of Nov. 30, 2018. The constraints previously cited along with eroding economics with continually rising well construction costs will throttle growth in the rig count.
"Operators are reluctant to increase long-term investments with volatile commodity prices, limited access to capital and a hostile regulatory environment."