BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

Permian oil output could grow 300,000 b/d/year at current price range: Pioneer CEO

Energy | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Metals | Steel | Petrochemicals | Shipping | Tankers

Market Movers Europe, Aug 19: Global uncertainty taints European oil and gas; steel battles for survival

Oil

Platts Rigs and Drilling Analytical Report (RADAR)

NGL | Oil | Crude Oil | LPG | Oil Risk | Petrochemicals

Platts University New York

Natural Gas | Oil

La victoria de la oposición populista en las primarias argentinas puede dejar en suspenso la inversión en energía

Permian oil output could grow 300,000 b/d/year at current price range: Pioneer CEO

Highlights

Could add 300,000 b/d annual production at $47-$57/b

With crude near $60/b, US may see incremental 500,000 b/d-plus

Eagle Ford, Bakken need $55-$60/b to start production boost

Houston — Production in the Permian Basin, the US' most active oil play, could grow significantly at current or slightly higher prices, but boosting Eagle Ford and Bakken output requires a step change in crude prices, Scott Sheffield, CEO of major Permian player Pioneer Natural Resources, said Thursday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Located in West Texas and New Mexico, the Permian could add 300,000 b/d a year at a $47/b to $57/b WTI price to domestic supply, Sheffield said in webcast remarks at the Barclays 2016 CEO Energy-Power Conference in New York.

Article Continues below...



NYMEX front-month crude settled Thursday at $47.62/b, up $2.12.

"I don't think the Eagle Ford or Bakken at a price of $47 are going to start up," Sheffield said of those basins respectively sited in south Texas and North Dakota/Montana. "I think [they] will be flat at a $50 price," he said. "Once you get to $55-$60, I think the Eagle Ford and Bakken start up at that time."

But Permian production, which is just under 2 million b/d, will grow at $50/b, even though US conventional oil will decline, he added.

"You start moving toward $60, and it will take a year to get going, but the US could easily [incrementally] supply 500,000-750,000 b/d" annually, Sheffield said. "At $60, rigs will come back to work and the Eagle Ford and Bakken will take off."

That volume growth level is "way too much" but it "could easily happen," depending on where crude prices go.

Eagle Ford and Bakken production currently supply about 1 million b/d of oil each. But production in the plays has dropped in the last 18 months by about 700,000 b/d and 200,000 b/d respectively.

PERMIAN BASIN PRODUCTION SEEN GROWING

The world may need some incremental US unconventional and shale supplies in 2018-2020, Sheffield said. But if those plays really gear up again they will produce "too much oil too fast," he said, since it takes several months to start and stop the growth engine.

Longer term, "we'll see $80 again and maybe higher, but we'll see $30 and $40 again too," he said.

Also, Sheffield believes the market may eventually add a $5/b to $10/b political premium to crude oil. The reason: Apart from the US, there are only four other countries that are really equipped to supply large volumes globally in a lower price environment -- Russia, Iran, Iraq and Saudi Arabia.

The Permian could hold as much as 150 billion barrels of recoverable oil equivalent, about equally split between the eastern Permian known as the Midland Basin and the western Permian called the Delaware Basin.

The Permian has produced about 35 billion boe to date, Sheffield said, during nearly a century of oil exploitation.

The basin's oil output, which has largely stood still for several months, is forecast to start growing again either late this year or early 2017 since its rig count is climbing.

Last month, the US Energy Information Administration reversed its projections for very slight declines in Permian oil output in recent months. For September, the agency projected a 3,000 b/d gain for the play, and some forecasters believe volumes are bound to further rise in late 2016 because of ramping activity in the basin.

Since late April, industry has added 70 Permian rigs for a total 202 last week. Pioneer will add five rigs there in second-half 2016, for a total of 17.

And with mergers and acquisitions in the basin picking up, its rig count could increase even more, Sheffield said. For example, just this week, EOG Resources announced it will acquire producer Yates Petroleum for $2.5 billion which nearly doubles its Permian acreage position.

"It wouldn't surprise me if another 100 rigs are added in next 12 months," Sheffield said. "Every time a deal is done, people add three to five rigs. So the Permian could easily get up to 300 rigs."

'VERY, VERY IMPORTANT DISCOVERY'

Aside from being the US' largest oil field, the Permian also produces about 6 Bcf/d of natural gas.

Pioneer, which favors the Midland basin for its greater amount of infrastructure and less broken-up geology than the Delaware, has 800,000 Midland acres.

The company plans to grow its total company-wide production -- which was 223,000 b/d of oil equivalent in the second quarter -- at 15%/year through 2020 at $46/b, he said.

"We could do this for 10 years," Sheffield added.

Midland's playing field is about 9 million acres, he said, whereas Delaware has about 5 million acres--a number that Sheffield said has likely increased by 500,000 acres because of the Alpine High discovery that Apache Corp., also a top Permian player, unveiled Wednesday.

The find, located in remote southwest Reeves County, Texas, holds an estimated 3 billion barrels of oil in place and 75 Tcf of natural gas, Apache said.

"It's basically on the western side of the Delaware, where most of us thought there was no oil and gas," Sheffield said. "They made a very, very important discovery."

--Starr Spencer, starr.spencer@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com