The Permian Basin is one of the nation's oldest oil and gas producing regions. It covers an area approximately 250 miles wide and 300 miles long and is composed of more than 7,000 fields (best represented in Railroad Commission of Texas production figures as districts 7C, 08, and 8A) in West Texas.
The Permian Basin’s long history is characterized by ups and downs. W. Abrams drilled the 1st well in 1920, but it produced only 10 barrels of oil per day. Although many experts considered the region a “petroleum graveyard,” Texon Energy tried again in August 1921. It spudded a well in Reagan County, near Big Lake, Texas.
Its cable-driven drill descended less than 5 feet per day, so progress was slow. After several months without success, a particularly nervous investor sprinkled rose petals over the site and christened the well Santa Rita in honor of the Patron Saint of the Impossible. His commitment paid off after nearly two years of drilling when oil burst out of Santa Rita №1 in May 1923. The well produced for nearly 70 years before it was capped in 1990.
The Santa Rita discovery prompted many investors to explore the Permian Basin, which is noted for its size and diversity. In the 3 decades following Santa Rita, discoveries of these resources led to large and steady increases in oil and gas production. Oil production peaked at nearly 2 million barrels per day in the early 1970s and gas production soared to almost 10 billion cubic feet per day.
A bust followed, lasting almost 2 decades. By the mid-2000s, oil production had declined more than 60 % from its peak in the early 1970s. However, in recent years, operators have applied horizontal drilling and hydraulic fracturing techniques with great success. Since February 2011, the portion of rigs dedicated to horizontal drilling has more than doubled. As a result, production in the Permian Basin has picked up.
In 2018, the U.S. Geological Survey estimated that the Delaware Basin in West Texas and Southern New Mexico has the potential to produce 46.3 billion barrels of oil and the potential to produce 281 trillion cubic feet of natural gas.
The share of U.S. oil produced in the Permian Basin has also increased since 2010. In May 2020, the Permian Basin accounted for 43.1 % of U.S. oil, up from 18.1 % in 2013.
The share of U.S. natural gas produced in the Permian Basin has also ticked up since 2011. In May 2020, the region accounted for 14.8 % of U.S. production, up from 5.4 % in 2011.