Oil production in the Permian Basin dates back to the 1920s although production data from the Texas Railroad Commission only goes back to 1940 when production reached 84 million barrels annually. The Permian Basin is one of the oldest as well as one of the largest and thickest deposits of sedimentary rocks in the country, covering the western part of Texas and eastern portion of New Mexico.
Annual production grew to about 550 million barrels in 1957 and then began a decline that took about a decade to get back to the 1957 level. It continued to increase and didn’t peak until about 1975 when it hit 750 million barrels. The 70s were a time of price and wage controls and a belief that domestic oil production was on the verge of exhaustion. By 1998, oil production had fallen to less than 400 million barrels annually.
Today, as a result of horizontal drilling and “fracking”, production has reached almost 4 million barrels a day meaning that it exceeds its 1975 production peak in a little more than 6 months. Not only has technology unlocked a tremendous amount of output, it has also helped to lower the breakeven cost per barrel from $60 to $33. This will permit high levels of production under any realistic crude oil price scenario.
EIA’s Annual Energy Outlook projects continued increases in domestic production rising above 15 million barrels per day by 2022 and staying above 14 million all the way to 2040. The main driver—the Permian Basin. At the beginning of the 21stcentury, most oil and gas companies believed that Permian was past its prime and were shifting investments to more promising areas. That has all changed thanks to advances in technology.
Renewable fuel and climate change advocates like to assert that the oil and gas industry is going the way of the horse and buggy. A survey by the UK Sustainable Investment and Finance Association claims that there is “there is growing consensus of the threat of climate change-related financial risks to investments in Integrated Oil Companies unless they change their business model within 10 years. In spite of predictions that the end is near, energy companies are demonstrating that science and engineering will continue to make oil and gas fuels of choice for decades to come. The threat is not wind, solar, and electric vehicles, it is wrong headed government policy predicated on a climate catastrophe that is always in the distant future.