The Permian Basin sprawls across far West Texas and southeastern New Mexico. Today, the basin stands as the most productive oil and gas region in the world. This “super basin” happens to be the primary field of operations for Integrity Wireline. Though our company works across Texas and in most bordering states, the Permian Basin occupies us most. The major oil companies and large independent producers in that region call upon Integrity more than do our customers elsewhere. Simply, more oil and gas come out of the ground there than anywhere else.
The Permian Basin matters. Not just to us, but it matters to approximately half of the U.S. oil and gas industry. Hence, we share this account of the Permian’s place, locally and worldwide.
PERMIAN BASIN: 100 YEARS AND COUNTING
The oil and gas industry in the Permian Basin entered its second century in 2021. The Basin has known many phases, changes, booms, busts, and revivals. In its present life, the region produces more than 5 million barrels of oil per day. That’s to say nothing of the prodigious amounts of natural gas and NGL’s (natural gas liquids) that the Permian Basin produces.
Further, the Permian Basin’s influence extends beyond its economic impact. The Permian’s development has had a significant impact on the region’s economy, culture, and environment.
HOW IT STARTED
Though the discovery of oil in the Permian Basin can be traced back to 1921. A Mitchell County, Texas, discovery well in the eastern Permian opened the Westbrook field to production. But the true landmark event for the Permian Basin came in 1923, when Frank T. Pickrell and Haymon Krupp drilled their Santa Rita No. 1 near Big Lake, Texas.
Their gusher on May 28 signaled the true beginning of the oil boom in the Permian Basin, as more and more oil wells were drilled in the following years. By the mid-1920s, the Permian Basin had become a major oil-producing region, and companies such as Texaco, Gulf Oil, and Standard Oil of California (now Chevron) had established a presence in the area.
PERMIAN BASIN: THE EARLY YEARS
During the 1930s, the Permian Basin continued to produce large amounts of oil, despite the challenges posed by the Great Depression. In 1938, the Permian Basin produced a record 92 million barrels of oil, making it the largest oil-producing region in the United States. The production of natural gas also began to increase during this time, as companies like El Paso Natural Gas Company and Texas Eastern Transmission Corporation began building pipelines to transport gas from the Permian Basin to other parts of the country.
With the onset of World War II, demand for oil increased dramatically, and the Permian Basin once again became a hub of activity. Additionally, the post-World War II period saw significant growth in the Permian Basin oil and gas industry. Advances in technology, such as the use of seismic surveys, allowed companies to identify and extract oil and gas reserves that were previously inaccessible. In 1948, the discovery of the Spraberry Trend, a large oil field located in the Permian Basin, led to a new wave of oil and gas exploration and development.
ADVANCES IN OIL DRILLING TECHNIQUES
The Permian Basin’s early “peak” came in the 1950s, as production saw sustained highs that exceeded previous years’. The 1960s witnessed a slow decline – a trend observable not just in the Permian Basin but throughout the onshore oil and gas industry across the United States. Beginning the late 1960s, and moving into the 1970s and ’80s, major oil companies began their exodus from the Permian and other U.S. oil plays, opting to put their assets into offshore and overseas fields.
The 1970s were a period of both growth and uncertainty for the Permian Basin oil and gas industry. The Arab oil embargo of 1973 led to a spike in oil prices, which made drilling in the Permian Basin more profitable than ever before. However, the industry also faced new challenges, such as that declining production from mature oil fields and stricter environmental regulations.
During the 1980s and 1990s, the Permian Basin oil and gas industry underwent significant changes. Nationwide, consolidation and mergers led to the formation of large companies like ExxonMobil and Chevron, which dominated the industry. But with the oil majors absent from the Permian Basin, the Basin itself was left with smaller, “independent” oil companies to produce the oil and gas – generally in decreasing amounts. Observers deemed the Permian Basin a resource that was in a slow, irreversible decline. But the independents were innovative and resourceful. Their time would come. The region would get its comeuppance – and in a way that would stun the world.
THE MOST PRODUCTIVE OIL FIELD IN THE UNITED STATES
The first decade of the 21st century saw modest ups and downs in the Permian Basin, with no substantial inflection points, but by about 2007 things became more interesting. Some 300 miles to the east of the Permian Basin, the Barnett Shale, in the region of Fort Worth, Texas, arose as a major play for natural gas. Companies active there – especially Mitchell Energy, run by George P. Mitchell – were “cracking the code” by extracting gas from so-called “tight,” unconventional formations of shale. They used hydraulic fracturing more aggressively than it had been applied in other fields.
By the early 2010s, producers in the Permian Basin were adopting the hydraulic fracturing process to their own well completions, with surprisingly good results. Also, 3D seismic imaging was added to their arsenals. Soon they were “turning the bit” to employ horizontal drilling techniques as well, thus increasing their exposure to the pay zones they sought.
By 2012, the Shale Revolution was in ascendancy in the Permian Basin.
The independent oil companies – operations like Mitchell Energy along with the independents of the Permian Basin region – were the innovators who pioneered these practices and revolutionized oil and gas on a global scale.
Major independents like Pioneer Natural Resources and Concho Resources extended their leaseholds and set records for production. By 2018, the Permian Basin was producing over 4 million barrels of oil per day, making it the most productive oil field in the United States.
The Permian Basin oil and gas industry has thus had a significant impact on the region’s economy, culture, and environment. The industry has created thousands of jobs – from upstream companies to downstream industries – and generated billions of dollars in revenue for local communities.
The development of the Permian Basin oil and gas industry has also had geopolitical implications. The United States’ increased domestic production of oil and gas has reduced its dependence on foreign oil, which has had implications for global energy markets and international relations. The Permian Basin’s proximity to Mexico has also made it an important source of energy for that country, with pipelines transporting natural gas and crude oil.