Oil executives in the Dallas Federal district have reached a consensus on the prospect of the West Texas Permian Basin oil field: there is reason to be optimistic. This district comprises Texas, Northern Louisiana and New Mexico. Already, oil and gas firms in the Permian Basin region have invested huge sums of money – billions of dollars – in an attempt to purchase a choice locations in the region. The value of land in the region has increased up to $60,000 per acre.
According to the Federal Reserve Bank of Dallas, “Oil and gas production increased for the second quarter in a row, according to executives at exploration and production (E&P) firms. The oil production index was 13.1, up from 9.0 last quarter, and the natural gas production index advanced to 17.6 from 3.1. This suggests oil and gas production is rising at an accelerating rate.”
An energy survey conducted between 15th and 23rd March by the Federal Reserve Bank of Dallas involved a majority of respondents from Exploration and Production (E&P) firms as well as 75 oil-field service companies. The outcome of the survey revealed that the respondents calculated that the business activity index of the Permian Basin has slightly increased from 40.1 in the first quarter to 41.8 – a big breakthrough for oil firms.
Data collected from United States Energy Information Administration is in line with the outcome of the survey. From this data, production in the United States shale has significantly been raised since September to 719, 000 barrels daily.
Exploration and Production firms have announced their respective breakeven price for new wells, ranging from $46-$8 per barrel between the Permian Basin, the Oklahoma Scoop Shale play, and the Texas Eagle Ford Shale play.
Furthermore, according to survey respondents, production capacity at the Permian Basin could exceed the present 2 million barrels a day, nearly doubling to 4 million barrels daily. Extrapolating this trend, this capacity could exceed current estimates and hit 5.5 million barrels daily. Some experts believe it will hit 7 million barrels a day in 10 years’ time.
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