Forget the #Permian_Basin: This Oil Basin Is Where the Growth Is Right Now RSS Feed

Forget the Permian Basin: This Oil Basin Is Where the Growth Is Right Now

The Permian Basin, which stretches across western Texas and the southeast corner of New Mexico, is the fastest-growing oil-producing region in the world. Output currently stands at around 3.3 million barrels per day (BPD) and has increased an astounding 800,000 BPD over the past year, which represents more than half of the worldwide production increase. That fast-paced growth, however, is about to come to a screeching halt because there is only enough pipeline capacity to move 3.6 million BPD. While the industry is building new pipelines as fast as it can, the current bottleneck could last until late next year.

Because the Permian expects to slow to a crawl in the next year, it’s opening the door for the Powder River Basin (PRB) of Wyoming to emerge as the industry’s new growth engine. That gives producers with land in the region a leg up on the competition, which is why investors should put this area on their radar.

A monster discovery
Shale giant EOG Resources (NYSE: EOG) has been one of the leading developers of the PRB over the past few years. In May 2015, the company said that it discovered two formations in the PRB — Turner and Parkman — that contained high-return drilling locations. However, after increasing its return hurdle rate in 2016, only the Turner formation — which holds an estimated 200 million barrels of oil equivalent (BOE) — met its criteria to deliver a premium drilling return.

That didn’t stop the company from continuing to explore its vast acreage position in the region. Because of that, the company was able to uncover two more formations that hold a treasure trove of oil resources. EOG announced these discoveries earlier this month, detailing that the Mowry and Niobrara shale plays held a stunning 1.9 billion BOE of recoverable resources, a more than tenfold increase…..

Read full article at Yahoo Finance