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The Next Texas Shale Bonanza

The US shale boom has largely happened in North Dakota’s Bakken formation and southeast Texas’s Eagle Ford formation. But there’s another formation—previously the site of extensive conventional drilling—that could shift this revolution into a higher gear. Situated in northwest Texas and southeast New Mexico, the Permian basin has produced roughly 29 billion barrels of oil so far and still contains an estimated 50 billion barrels of technically recoverable oil. The FT reports:

Along with the Bakken/Three Forks shale of North Dakota, and the Eagle Ford shale of south Texas, the Permian is one of the centres of the onshore oil boom that has lifted US production almost 50 per cent over the past five years. Production in Texas has doubled in the past three years to its highest level since the 1980s. […]

Of course, it won’t be as easy as sticking a pipe in the ground and sitting back to rake in the profit:

The shale boom has been driven by companies drilling the most productive locations first. As the industry continues to expand, it has to push into areas where the geology is more difficult. An average horizontal well in the Permian might over its lifetime yield about 120,000 barrels of oil, Bernstein calculates, compared with almost 300,000 barrels in the Eagle Ford, or 350,000 in the Bakken.

To make it economically viable to drill wells with lower estimated ultimate recoveries (EURs), companies are figuring out ways to bring down drilling costs. The American oil company Hess was able to bring down the per-well drilling cost in the Bakken formation nearly 36 percent, and Eagle Ford wells can now be drilled in roughly half the amount of time that it took in 2011.

We’ll have to wait and see how this pans out, but we can reasonably expect oil and gas companies to continue to innovate and figure out how to bring more out of America’s shale fields at lower costs. The boom rolls on.

[Texan oil rig image courtesy of Shutterstock]

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  • Corlyss

    Thank God most of these sources are in Red states. That gives me hope. Places like Pennsylvania and NY are lost causes.

    • rheddles

      Never hear of the Marcellus Shale? They’re drilling it in PA.

      • Ronald W. Mann

        We were drilling there in the early 80s not really anything new just unknown to the general public

      • Corlyss

        Yes, I know. I believe some of it slops over into NY, which is why I mentioned the two together. Pa’s also the home of the lawsuits about groundwater contamination. It’s a blue state and I’m waiting for the EPA to link hands with the envirothugs in Pa. and shut them all down. I hope I am pleasantly surprised that it doesn’t happen.

        • rheddles

          Prepare for surprise. PA is a purple state (Gov-R, State Sen-R, State House-R) and the Marcellus is in the red part. The poor farmers there are going all Clampett and unless there is a Valdez type event, they will keep pumping. Drilling has really died off because of the price, but when it goes up or can be exported, it will restart. The lawsuits are of the nuisance variety from the wackos and are unlikely to succeed.

          NY is a different story.

    • Atanu Maulik

      As the boom rolls on, do you really believe that the blues will be able to resist the temptation ? With economies stalling and businesses running away, how will they keep buttering their votebanks ?

      • Corlyss

        Yes. If they get Republican govs and legislatures, maybe not. But as long as they are ruled by Dems, I do expect them to do anything they can to avoid sullying their Blue ideological credentials. When one’s entire sense of self is bound up in ideological tropes, giving them up is almost impossible. I hold out no hope that they will do the political equivalent a Javier suicide soon enough to do the nation any good.

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