All About Oil Drilling in Texas’ Permian Basin


The Permian Basin is located in West Texas and southeastern New Mexico. At 300 miles long and 250 miles wide, this massive oil field accounts for a whopping 17 percent of the United States’ crude oil supply. Drilling techniques include horizontal and vertical drilling, and increasingly, a newer CO2 injection technique that is gaining popularity as a highly efficient means oil recovery.




The first commercial activity in the vicinity happened in 1921, when production started in the sleepy towns of Odessa and Midland. Both towns prospered as boomtowns throughout the 1920s as drilling in the Basin ramped up. Though all the oil fields that were discovered before 1928 produced from depths less than 4,500 feet, but a deep test in 1928 at the Big Lake oil field in Reagan County found a large flow of oil and gas at 8,525 feet. That discovery paved the way for future decades of oil and gas production. Today commercial drilling in the area is led by companies with drilling operations, including Concho, Apache, Pioneer, and Chesapeake Energy.
Permian Basin is Set for Continued Growth

The Permian Basin is considered one of the cheapest and most-prolific United States shale oil fields. Though Permian once boomed in the 1920s, and remained consistent since, recent exploration there has uncovered huge untapped reserves, a majority of which are owned by a single company. Back in 2011 a geologist for Pioneer, a moderate-sized oil company operating out of Dallas, excitedly relayed to the board news of horizontal shales he had discovered while exploring the company’s property in the area. Then CEO, Scott Sheffield, ordered the commencement of horizontal drilling which yielded fruitful returns 7 times greater than previously used vertical drills. The result? The company realized it could be sitting on more than 10 billion barrels of crude.
Although oil prices fell to $26 a barrel and major collapses were feared, large and mid-sized U.S. independent producers operating in the Permian and elsewhere have somehow managed to avoid bankruptcy and keep growing despite the downturn. Today, Pioneer and other big name oil companies continue their drilling operations in the Permian Basin despite the lows, banking on the fact that oil prices will once again skyrocket.

According to Today Online, this recovery has stumped Saudi Arabia and other OPEC countries, as major US shale companies have beaten back OPEC’s attempt to saturate the market and force US producers out. By flooding market supply, OPEC has reduced the prices enough to effectively push out a number of small producers who have had to file for bankruptcy, but no U.S. producer that pumps more than 100,000 barrels per day (bpd) has gone out of business, meaning places like Permian are still producing.

Encouraging Activity

Throughout the U.S., activity has picked up significantly in recent weeks. A recent report from the Wall Street Journal suggests that the overproduction stimulated by OPEC could be a non-issue by the end of 2016. In the last few months, several global production outages in places like Canada and Nigeria have drastically reduced the surplus, which is a good sign for U.S. producers who have managed to hang on during the downturn. In the Permian Basin, drillers are still sitting on billions of barrels of unproduced crude, just waiting for oil prices to climb.