6
Energy Security The Permian Basin is essential to meeting future energy needs, and with new advances, can do so while enhancing global efforts to reduce climate challenges. The United States is the top oil and gas producer in the world—and the Permian Basin accounts for nearly half of all U.S. production. The region is also a major center for renewable energy resources and innovative technologies that facilitate global production. The region is critical to U.S. energy security and improving the trade balance fostered by energy exports. Despite temporary disruptions due to the COVID-19 pandemic and the February 2021 winter storm, the Permian Basin’s annual oil production has increased over the past three years, from 1.59 billion barrels in 2019 to 1.64 billion barrels in 2021.7 Production increased in early 2022 as the world economy returned to normal growth patterns and prices elevated because of supply and demand and the dislocations from the Russian invasion of Ukraine. Monthly production of natural gas in the Permian Basin has also risen. Overall annual natural gas production in the Permian has increased from 5.5 TCF (trillion cubic feet) in 2019 to almost 6.5 TCF in 2021.8 The Permian Basin has advantages over many regions, with massive untapped reserves from multiple layers of shale rock, costly energy infrastructure already in place, high driller
productivity rates and relatively low breakeven costs. While the COVID-19 pandemic and associated decrease in demand and prices caused a major drop in rig counts in both New Mexico and Texas, rig counts are now steadily increasing. The total rig count fell from nearly 400 in mid-March 2020 to a low of 117 on August 14, 2020. Since that time, the number of rigs has rebounded to a total of 350 on July 15, 2022. According to Rystad Energy, the total completed lateral footage of wells in the Permian is expected to reach a record high of 50 million feet in 2022, beating 2021’s total of 45.8 million feet and racing past pre-COVID-19 levels of 47.5 million feet seen in 2019. Ongoing gains in rig count, frac count and operational efficiencies are to be expected. Liquefied Natural Gas (LNG) is a rapidly growing segment of the international energy market and represents an emerging growth opportunity within the Permian Basin. The United States is now the world’s leading exporter of LNG as Europe’s energy crisis, Russia/Ukraine supply issues and shortages in China, and a growing demand for cleaner fuels, send demand for American shipments soaring. The U.S. Energy Information Administration (EIA) projects U.S. LNG exports will reach 11.4 billion cubic feet per day (bcfd) in 2022. This would account for roughly 22% of expected world LNG demand of 53.3 bcfd next year, according to Goldman Sachs analysts, and would outpace both Australia and Qatar, the two other largest exporters at present.
Production for the Permian Has Increased From
1.59b
1.64b
Barrels from 2019 to 2021
5.5 TCF
6.5 TCF
in Overall Annual Natural Gas Production from
2019 to 2021
