Permian Basin 2018

Issue link:

Contents of this Issue


Page 7 of 99

PERMIAN BASIN: OVERVIEW 6 | October 2018 | Constraints Despite the oil and gas industry's ability to create boom towns where none previously existed, the fact is that the fervor showed by operators is outpacing the ability of the rest of the value chain to keep up. "We are a victim of our own success since we are developing bottlenecks in getting crude and natural gas out of the Permian Basin, and thus our differentials, in other words, what we get paid rela- tive to the benchmarks, have widened," Pruett said. From takeaway capacity to labor, the region is struggling to capture the full value of its bountiful production. Pipeline capacity is a major concern. New pipeline projects are in the works, but for now it remains a challenging environment. "There's no doubt that the oil and gas indus- try has hit its bottom and bounced back, with the Permian Basin leading the way," said Bernadette Johnson, vice president of market intelligence at DrillingInfo, in a recent release. "The Permian holds some of the best breakeven economics in the U.S., but not all leases and holdings are created equal. We also see takeaway capacity nearing its limits in the Permian, and constraints could have consequences for some. Some will thrive while oth- ers will barely survive." According to a recent Financial Times article, Ryan Lance, CEO of ConocoPhillips, said his com- pany was planning to redeploy assets out of the basin but that the move was only temporary. Lance noted that the current pipelines had fi lled up more quickly than expected. "Production has come on quicker in the Permian Basin because the rigs were ramped up a lot faster than we would have thought maybe a year or a year and a half ago," he said. Truck drivers, water, supplies and more are all in short supply in the Permian Basin due to the increased pace of development in the region. (Photo by Jennifer Presley)

Articles in this issue

Links on this page

Archives of this issue

view archives of Playbooks - Permian Basin 2018