Pioneer’s Scott Sheffield points to the Permian’s full potential, Cheniere CCO Anatol Feygin touts U.S. LNG export growth at the EIA 2017 Energy Conference

It’s been an interesting week or two for U.S. energy on the world stage. The new administration’s pro-energy development posture has gone into overdrive.

From energy-focused cabinet leaders mandating studies as to the need for new rules,  rolling back prior agency orders and taking steps to cut through decades of red tape that have significantly held back oil and gas development (Rick Perry heading the DOE, Ryan Zinke heading the Department of the Interior, and Scott Pruitt heading the EPA) to opening up the Arctic to the president’s current U.S.A. energy promotional trip in Europe, it’s almost shocking when you consider the level of potential business awaiting U.S. energy producers.

Total oil in the Permian rivals Ghawar

There’s no hiding the potential oil production that could eventually come out of the Permian basin in West Texas and New Mexico.

In a presentation at the EIA’s 2017 energy conference last week, Pioneer Natural Resources Executive Chairman Scott Sheffield outlined growth in the Permian in the context of other producing basins and the oil price downturn.

Pioneer’s presentation compares the Permian’s total expected recoverable oil to several distinguished fields, worldwide. The presentation compares Saudi Arabia’s Ghawar field with a little less than 160 BBOE of expected recoverable resources to the Permian. Thus far, the Permian has produced approximately 38 BBOE and—between the Midland basin and the Delaware basin—may have nearly the same 160 BBOE of expected recoverable resources as Ghawar—the supergiant that created Saudi Arabia’s founding family’s wealth.

As Big as Ghawar, Permian Oil and U.S. Shale Gas Could Potentially Fill Global Demand

Source: Pioneer Natural Resources

Other notable fields like Burgan, in Kuwait; Safaniyah, in Saudi Arabia; and the Eagle Ford, in the U.S. do not hold nearly the same amount of potentially recoverable resource, with values ranging from approximately 49 BBOE to 29 BBOE.

As with the rest of the U.S. shale boom, the key, Pioneer said, to unlocking the recoverable potential in the Permian was the establishment of horizontal drilling technology in the basin. Since 2009, production out of the Spraberry and Wolfcamp formations has grown by approximately 1,000,000 BOEPD.

The report also indicated that the Permian basin was the only basin to grow since OPEC’s November 2014 decision to raise its production. The other fields—notably the Eagle Ford, Niobrara, and Bakken, among others—either remained relatively stagnant or have experienced a decrease in production.

Gas for Europe and Asia

On the natural gas side, the EIA conference brought in Anatol Feygin, Cheniere Energy EVP and chief commercial officer. Feygin laid out the future for U.S. gas producers to sell their energy to the world in a presentation called “U.S. LNG EXPORTS: GAME CHANGER FOR THE GLOBAL GAS MARKET.”

Cheniere believes that the U.S. has the potential to provide at least eight Bcf per day of LNG exports by 2020, and that—by that time—it will secure a position among the top three LNG suppliers alongside Qatar and Australia.

Feygin’s presentation emphasized how flexibility of U.S. LNG pricing tied to Henry Hub, instead of oil, will garner business for U.S. LNG exporters.

Cheniere was first-to-market of several U.S.-based LNG export projects when it began shipping cargoes from its Sabine Pass plant in southern Louisiana in Q1 2016. About a dozen other projects are in various stages of planning, design, construction and permitting.

In its latest count, the EIA reports total proved natural gas reserves in the U.S. for 2015 at 324.3 Tcf, down from 388.8 Tcf reported for 2014. New EIA reserves data will be available in Dec. 2017, the agency said.


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