Production in the Permian Basin, the largest oil-producing region in U.S., is forecasted to steadily rise.(Source: Shutterstock)
Production of crude oil and natural gas from the Permian Basin is likely to exceed pre-pandemic levels by 2022 amid market recovery, GlobalData said in their latest report.
The Permian Basin, which is the most sought-after basin in the U.S., was the most affected play in the country during the COVID-19 pandemic, the research firm said. However, Permian production is finally expected to return pre-pandemic production levels, clearly reflecting recovery of the U.S. shale industry.
Gradual recovery in the production has been observed in the basin, despite lagged activities during February amid winter storms. The report shows the Permian Basin is currently producing about 4.6 MMbbl/d and is projected to reach over 4.9 MMbbl/d of crude oil production by mid-2022, which surpasses pre-pandemic production of 4.8 MMbbl/d in February 2020.
"Production in the Permian Basin peaked in December 2019 and the upswing continued during Q1 2020," said Svetlana Doh, oil and gas analyst at GlobalData. "Since then, however, it started tapering off due to the global ‘demand crash’ caused by the COVID-19 outbreak. The ease of restrictions and travel bans during H1 2021 have improved the demand prospects, encouraging production activities in the basin.”
Steady production growth coupled with growing capital investment by major players in the basin is expected to support steady production growth over the next five years, with forecasts of exceeding pre-pandemic levels. In addition, GlobalData expects oil and gas companies to return focus to their core assets in the Permian Basin and ramp up drilling and completion activities.
Commenting on the Permian rig count, Doh said, "Despite WTI price rebounding to the pre-pandemic levels, rigs are still slow in catching up. Permian Basin rig count dropped to its lowest point in August 2020 at 117 rigs. Since September 2020, the basin has seen a slow increase in rig count, about 7%. As of June 2021, there were 235 rigs operating in the Permian Basin compared to only 135 rigs a year ago in June 2020."
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