Bull's eye on US' Permian Basin as oil prices rise

FILE - In this April 24, 2015 file photo, pumpjacks work in a field near Lovington, N.M. With more barrels of oil being pumped monthly from the Permian Basin, New Mexico is among the nation's top producing states. (AP Photo/Charlie Riedel, File)

ALBUQUERQUE, N.M. – Some of the largest energy companies in the U.S. have already invested billions of dollars on claims up and down the Texas-New Mexico state line, tapping one of the nation's richest and most prolific oil and natural gas regions.

Now the stakes just got higher, as the U.S. Geological Survey released a new assessment Thursday that shows portions of the Permian Basin could hold even more promise.

With the potential to double the nation's onshore oil and gas resources, the agency estimates more than 46 billion barrels of oil and some 280 trillion cubic feet of gas are within two formations on the southwestern side of the basin. That's the largest continuous oil and gas resource potential ever assessed.

While agency geologists caution that more study would be needed to determine the profitability of going after the resources, industry groups and top officials within the Trump administration are encouraged and say the assessment underscores the activity that's already happening in the basin.

"Before this assessment came down, I was bullish on oil and gas production in the United States," Interior Secretary Ryan Zinke said in a statement. "Now, I know for a fact that American energy dominance is within our grasp as a nation."

The announcement comes as OPEC countries voted Friday to cut oil production beginning next year as a way to force crude oil prices higher despite political pressure from President Donald Trump. The group of oil-producing nations was looking to rein in supply as prices had fallen about 25 percent because major producers, including the U.S., have been pumping at high rates.

Producers throughout the Permian were closely watching Friday's developments and there were no indications of things slowing down in the oilfields.

Stephen Robertson, executive vice president of the Texas-based Permian Basin Petroleum Association, said the signs for the basin's potential have been there for a long time.

"The fact is that Reeves County, which in the heart of that play, is running more rigs than any other county in the nation and has been doing that for quite a while," he said. "The people out here know that it's there and it really is that improvement of the technologies and the increased efficiencies allowing people the ability to actually be able to access it and produce it."

Still, a main factor is price.

"If the price drops to a point where it's not economical, then it doesn't matter if it's there. It's not going to be produced," Robertson said.

New Mexico's share of the Permian Basin has helped to drive production in the state to record levels in 2017. This year is expected to be another banner year as industry officials say the state is on pace to surpass 200 million barrels.

The flurry of activity in southeastern New Mexico has put pressure on everything from housing and schools to highway infrastructure. Concerns also have been raised by state Land Commissioner Aubrey Dunn about the environmental impacts as state and federal regulators have had a difficult time keeping up with the pace of development across the region.

Dale Janway, mayor of the southeastern New Mexico city of Carlsbad, told The Associated Press that with the news of more resources in the Permian comes greater responsibility.

"We know that we need to redouble our efforts to improve and develop infrastructure in the area and to work closely with the county, state and our business partners to best prepare for the future. We're in it for the long haul," he said.

The boom also has resulted in a significant budget surplus that will give incoming Gov.-elect Michelle Lujan Grisham and the Democrat-led Legislature more options as they hash out spending priorities for everything from education and public safety to infrastructure.