Permian Basin production should recover from COVID-19 slowdown by 2022: GlobalData
Permian Basin, the largest oil producing basin in the US, was the most affected play in the country during the COVID-19 pandemic times. However, production of crude oil and natural gas from this play is likely to exceed the pre-pandemic levels by 2022 amid market recovery from the pandemic, says GlobalData.
According to GlobalData's latest report, ‘Permian Basin in the US, 2021 - Oil and Gas Shale Market Analysis and Outlook to 2025', the Permian Basin is producing about 4.6 million barrels of oil per day (mmbd) at present and is projected to reach over 4.9 mmbd of crude oil production by mid-2022, which surpasses pre-pandemic production of 4.8 mmbd in February 2020.
Svetlana Doh, Oil & Gas Analyst at GlobalData, comments: "Production in the Permian Basin peaked in December 2019 and the upswing continued during Q1 2020. Since then, however, it started tapering off due to the global ‘demand crash' caused by the COVID-19 outbreak. The ease of restrictions and travel bans during H1 2021 have improved the demand prospects, encouraging production activities in the basin."
However, steady production growth along with positive investment outlook has set the expectation of production reaching to the pre-pandemic levels by 2022 after recovering completely.
Ms Doh concludes: "Despite West Texas Intermediate (WTI) price rebounding to the pre-pandemic levels, rigs are still slow in catching up. Permian Basin rig count dropped to its lowest point in August 2020 at 117 rigs. Since September 2020, the basin has seen a slow increase in rig count, about 7%. As of June 2021, there were 235 rigs operating in the Permian Basin compared to only 135 rigs a year ago in June 2020. GlobalData expects oil and gas companies to refocus on their core assets in the Permian Basin and ramp up the drilling and completion activities."