United States faced the most drastic changes in the oil and gas market in 2016. Just as the recent Presidential Elections, what US major oil companies found in the land which says “You can make it in America” was largely unexpected. We discuss The Permain Basin Explosion.

 

The Permain Basin explained:

While everyone knew Texas had lots of oil hidden, the United States was facing an oilfield depression. Non profitable extraction was a major concern for the big companies till The Permian basin exploded (not literally) with huge oil reserves. Throughout summer and fall, company after company announced major asset acquisitions in the region, with some, like Pioneer Resources, talking about their ability to profitably drill even with oil prices in the $30-$40 range.

 

Rig count escalated quickly and rising even more (250 plus).

Then, in mid-November, the USGS raised enthusiasm for the Permian even higher with a new, gigantic resource estimate. At year’s end, the oil boom was alive and well in West Texas and Southeast New Mexico. Cost of drilling plunged, a major factor in “fuelling” the boom as rig count rose steadily.

 

Oil companies reported of reduction in cost to even half of 2014 level due to lower service provider rates, shorter drilling times, and impressive gains in process efficiencies. Hydraulic fracturing technologies flourished and drilling times shortened making a number of projects economic for drilling, the reason for soaring EURs (Unexpected Ultimate Recoveries). All good for an industry that had been declining since 2014.