The Permian region of western Texas and eastern New Mexico continues to be a powerhouse for U.S. crude oil and natural gas production, with significant growth driven by improvements in well productivity and expanded infrastructure.
According to the latest Short-Term Energy Outlook (STEO), U.S. crude oil production is expected to reach an average of 13.7 million barrels per day (b/d) by 2025, with the Permian region playing a central role in this increase.
Similarly, marketed natural gas production is forecasted to grow to an average of 114.3 billion cubic feet per day (Bcf/d), with much of this growth also coming from the Permian.
A key factor contributing to this growth is the region’s ability to maintain high levels of productivity despite a decline in the number of active drilling rigs since late 2022.
The Permian has consistently had more active rigs than the rest of the Lower 48 states combined, and it continues to complete hundreds of wells each month.
These new well completions are producing significant amounts of oil and natural gas, more than compensating for the natural decline in production from older wells.
As of July 2024, newly completed wells in the Permian were producing an average of 433,000 b/d of crude oil and 780 million cubic feet per day of natural gas in their first full month of production.
Technological advancements and future projections
The rise in well productivity in the Permian is largely due to the successful implementation of advanced drilling and completion techniques.
These include longer lateral well lengths, optimized well spacing, and enhanced fracturing designs, which have significantly boosted the efficiency and output of new wells.
These technological advancements are expected to continue driving growth in the region, with crude oil production projected to increase by 430,000 b/d from 2023 to 6.6 million b/d in 2025.
Similarly, marketed natural gas production in the Permian is expected to rise by 1.9 Bcf/d in 2024 and by an additional 1.0 Bcf/d in 2025, reaching an average of 25.8 Bcf/d by 2025.
New pipeline capacity to support growth
One of the challenges the Permian region has faced in the past is the ability to transport its rapidly growing oil and natural gas production to demand centers.
However, several new pipeline projects are set to alleviate these transportation constraints.
Enbridge, for example, is expanding its Gray Oak pipeline by 120,000 b/d, with completion expected by the end of 2025.
Additionally, the 580-mile Matterhorn Express Pipeline, which is expected to be operational by the third quarter of 2024, will transport up to 2.5 Bcf/d of natural gas from the Permian’s Waha Hub to Katy, Texas.
These pipelines will enhance the region’s capacity to move oil and gas to key markets, supporting continued production growth and ensuring that the Permian remains a vital contributor to the U.S. energy supply.
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