Drilling for Oil on the Rise in the Permian Basin

In 2014 at 1,443, the number of U.S oil rigs is at the highest level it has been since 1987. An increase of 13 oil rigs, the uptick has been attributed to the increase in activity in the Permian Basin, an area located predominately in Texas and stretching into New Mexico. Now at 265, the number of horizontal drilling rigs in the area are at the highest level since 2011.

The Permian Basin has been on the radar of oil producers since the first commercial oil wells were started there in 1921. Named for the geological period in which it formed, the Permian Basin is a part of the Mid-Continent Oil Producing Area. The sedimentary basin is a source of both oil and natural gas, and it covers an area of approximately 86,000 square miles.

Hydraulic fracturing, a horizontal drilling technique being successfully implemented across the country, allows access to shale deposits of oil in the Permian Basin that were previously untouched. This has allowed the U.S. to increase crude output to levels not seen in 25 years. As efficiency has increased, energy costs have dropped, lowering expenses for various industries, such as the airline industry. Additionally, output in the Permian Basin is only expected to rise, with various oil producers in the area looking to add more rigs during the year.

With shale oil deposits located as far north as North Dakota, running south into Texas, the opportunity for businesses to capitalize on the hydraulic fracturing technique continues to grow. One company that is successfully implementing this method is Cunningham Energy (more on Cunningham). Based out of West Virginia, they have operations located throughout the Appalachian, Illinois, and Williston Basins.

By pumping water, sand, and a selection of chemicals into the shale, the pressure the material is subjected to is increased. Once the pressure crosses the threshold of what the material can handle, fractures are created, opening pathways to pockets of underground resources that were previously inaccessible. These fractures allow various natural resources, including crude oil and natural gas, to more easily escape to the surface. A more efficient process than traditional drilling, this allows materials to be extracted more quickly. Commercial involvement in the area is anticipated to increase, with the potential to increase output even further over time.


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