By Mike Killalea, Editor/Publisher
It’s no great revelation that the Permian Basin in West Texas and New Mexico is the major driver for drilling and completion activity in the United States. After nearly a century of production, this prolific basin is today transforming the US into a swing producer in the global oil market.
DrillingContractor.org has produced a virtual panel discussion, “Drilling & Completions in the Permian Basin Today,” to explore the latest in D&C activity and challenges. The webcast, which airs on 6 September, features the regional D&C managers for two of the most active operators in the region – Rodney D Littleton, Vice President of Permian Drilling for Pioneer Natural Resources, and John Willis, Drilling & Completions Manager for Occidental Oil & Gas Corporation Permian Resources New Mexico Business Unit. See link below to register for the free webcast.
The rig count tells the story. Of the 459 rigs running in Texas the week of 11 August, 262 were in Texas Railroad Commission District 8, which encompasses the Permian Basin. And in New Mexico, 61 rigs were running, nearly twice the count a year ago.
This strong performance is driving employment, and with the jobs, housing. Target Logistics, for instance, just added 100 single-occupancy rooms to its lodge in Pecos, Texas, with plans to add 80 more in October, bringing capacity to 543. The company also plans to add 110 rooms in Mentone, Texas, by year-end, for a total of 430.
Pioneer’s ambitious goal is to achieve 1 million bbl of oil equivalent per day (BOEPD) by 2026, a 10-year goal set in 2015, when production was 204,000 BOEPD. Pioneer is shooting for more than 70% oil, up from 52% in 2015. Oxy’s unconventional production stands at 138,000 BOEPD, with plans to increase by 80,000 BOEPD by year-end 2018.
Given – as always – supportive oil prices, both companies plan flat to modestly increased drilling programs this year and next. Pioneer currently operates 18 rigs in the Permian, with plans to add four more after the second quarter 2018, while Oxy, with 11 rigs running today, foresees eight to 13 in 2018.
Challenges and concerns
Safety is a major issue, Messrs Littleton and Willis agree. The frenzied activity and new industry hires create tension between efficient working and working safely. It is less at the rig site and company-operated facilities, they note, than on the road and off-location shops.
“We have a lot of new people in the industry, and that’s caused a dramatic increase in the number of still relatively minor incidents, but we’re very concerned about that, and we want to have a lot of focus to increase that safety performance,” Mr Willis said.
The infamously hard rock of Permian Basin formations presents a large challenge for drilling tools, especially smaller equipment. “The smaller-hole tools have not really been set up for West Texas, as yet,” Mr Littleton said.
Water usage is also sensitive. Both Oxy and Pioneer are taking steps to minimize use of precious fresh water. Mr Littleton noted that Pioneer owns its own frack company and through it is developing fluids that can frack with produced or brackish water. Further, the company has arranged with the city of Odessa to use municipal effluent water.
Oxy has put significant effort into its drilling dynamics program, aimed at optimal BHA design and bit selection, and at managing drilling parameters to minimize vibrations and extend bit and tool life. “That’s been very successful and a very big factor in improving our performance,” Mr Willis said.
Tune in on 6 September and hear the speakers’ thoughts on multilaterals, completions, automation and advice for service companies. DC