(The Center Square) – The Permian Basin continues to be New Mexico’s oil and gas industry star as output rises, allowing the state to surpass other top producing states.
New Mexico’s record production in May saw the state pull ahead of another major producer state - North Dakota - for three straight months, World Oil reported.
The basin has many benefits, one of which is its cost advantage over North Dakota.
The recent move by some producers to focus on spending less on capital outlay in order to have more to return to shareholders has producers looking for ways to cut costs, World Oil reported. This plays into the Permian’s advantages.
“It is a basin that has a very attractive cost/benefit analysis compared to other basins, largely because of both the geology of the region as well as the infrastructure and workforce that’s already current here,” Stephen Robertson, executive vice president of the Permian Basin Petroleum Association, told The Center Square.
Robertson described the basin as a “layer cake” of formations from which hydrocarbons can be produced.
“There are multiple different decks that you can produce from depending on where you’re to be able to get economic value out of that,” he said.
The Permian’s long-established production history gives the region another leg up, he said.
“We’ve been producing in this region for over a hundred years,” Robertson said.
He adds the established infrastructure and historic workforce have developed communities who understand the industry and benefits it brings.
Another cost advantage attracting producers is the region’s high volume of ducts which are drilled but uncompleted wells, according to Robertson. These allow producers to keep extracting while keeping their costs down, he said.
In addition, advances in natural gas capture as well as increasing prices for that resource have boosted the Permian’s cost effectiveness.
“There’s been a huge focus lately to improve not just natural gas production but capture and reduction of emissions and flaring for environmental purposes, and also to be able to make sure that production is going to market, because the pricing in market is more attractive than it had been,” he said.