Fracking Companies Focus on New Oil Fields
Looking for New Locations
The American shale-drilling industry is slowly recovering from a historic crash in oil prices. However, the industry may be permanently changed in some ways. For example, some oil fields are drawing interest from more investors than before the price crash, but others are experiencing production cuts.
When oil prices fell in April, major oil companies were heavily impacted. Whiting Petroleum Corporation (WLL) filed for bankruptcy protection and Oasis Petroleum Corporation (OAS) advised it might not stay in business. One of the largest oil producers, Continental Resources Incorporated (CLR), planned to cut back on 70% of its production in May. As companies try to recover, many are making different choices about where to drill.
Even before the oil price drop, investments in some of the most popular oil fields were diminishing and producers were forced to drill through their best available spots. Now, many oil production companies are shifting their focus to new locations which may be more profitable such as the Permian Basin that runs through Texas and New Mexico.
Production is Down in Bakken Region
The impact of the oil price crash has varied across different drilling regions. The Bakken region, which is located in North Dakota, is expected to produce 1.1 million barrels of oil per day this month, down from the roughly 1.5 million barrels last fall.
Similarly, the Eagle Ford region of South Texas may not top its 2019 shale-oil output for another four years, and then may decline. However, some other regions, like the Permian Basin, are seeing increased drilling and investment.
Pay Attention to the Permian Basin
If growth occurs as expected, the Permian Basin is an oil field to keep an eye on for years to come. Oil companies looking for growth tend to target areas with 10 or more years worth of usable drilling locations. Oil production in the Permian Basin is expected to grow by 2021 and continue through 2030.
Projections about the Permian Basin’s capabilities are higher than predictions for many other regions. For this reason, large companies such as ExxonMobil (XOM) and Chevron Corporation (CVX) are expanding in the Permian. Both have plans to increase production and are aiming to produce one million barrels per day in the region by 2024.
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