Permian Basin

Published on: May 2, 2022

The Texas Railroad Commission’s Response (so far) to Winter Storm Uri

A great article appears in the March Section Report of the Oil, Gas and Energy Resources Law section report, by Jacqueline Weaver, Professor Emeritus, University of Houston Law Center: “The Railroad Commission’s New Duties to Keep Texans Warm: Winter Storm Uri Forces Change.” Here are some excerpts:

The throughput of dry gas production from Permian Basin processing plants dropped 85% from early February to February 18, [2021] and two-thirds of the gas processing plants in the Permian Basin had outages. The natural gas industry blamed electricity suppliers for cutting off power to them when they most needed it; power generators blamed the gas industry for failing to supply gas to them. Many natural gas providers had not filed a short form with ERCOT, the grid operator for most of Texas, that would have exempted them from electric outages during emergencies. The Railroad commission seemed unaware of this form and exemption process. Clearly, the natural gas and electricity sectors needed to communicate and coordinate more closely. In the ERCOT system, natural gas provides about half of all electricity generation.

According to an FERC-NERC Staff Report on Storm Uri:

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Published on: March 10, 2020

A Review of World Oil Production and Consumption

By John McFarland

To better understand the recent news about the precipitous drop in crude prices, it is helpful to review the global picture of world oil production and consumption. (click on images to enlarge.)

In 2018, the US produced 18% of total world oil production, the most of any country. If Saudi Arabia increases its production by a million barrels a day, that would increase world production by about 1%.

In 2017, the US consumed 20% of total world oil consumption.

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Published on: February 17, 2020

Boomtown!

By John McFarland

I highly recommend a podcast sponsored by Texas Monthly, Boomtown. It’s a series about the history of the Permian Basin and the people who live and work there in the recent boom. Its host is Christian Wallace, who grew up in Andrews. You’ll get to meet his grandmother, who still lives there – quite a lady. You can download it on Apple Podcasts.

Published on: January 2, 2020

End of a Decade: Rise of the Permian

By John McFarland

Happy New Year.

The decade now ending was the decade of the Permian Basin. Its rise in production changed the US to a net oil exporter.

Permian gas production, a byproduct of the search for oil, drove down gas prices and resulted in a frenzied effort to build pipelines to move the gas to the coast.

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Published on: May 28, 2019

The TPLT Proxy War

By John McFarland

A couple of years ago I wrote about the history of Texas Pacific Land Trust (TPLT), one of the largest landowners in Texas. The trust was formed out of the bankruptcy of Texas Pacific Railroad, which received 3.5 million acres of land in West Texas in consideration for building the T&P Railway across the state. It went into bankruptcy in 1888, and its land was put in a trust to sell of to pay the railroad’s bondholders. Those certificates of trust were later listed on the New York Stock Exchange, where they trade under the ticker TPL. Its shares closed today at $786.44 per share, a market cap of $6.2 billion.

TPLT now owns some 888,000 acres of land. The minerals under its land were spun off into a separate company and acquired by Texaco, now Chevron – now one of the largest mineral owners in the Permian. TPLT has royalty interests under about 500,000 of those acres, in El Paso, Hudspeth, Culberson, Reeves, Pecos, Winkler, Ector, Midland and Glasscock Counties. In addition to collecting royalties the trust makes money granting easements and collecting damages from oil companies operating on its land, and has recently begun a business supplying water to the industry. Continue reading →

Published on: May 6, 2019

Players in the Permian

By John McFarland

Below is a Drillinginfo map of players in the Permian. Also see Forbes article here. Chevron’s position is derived from Texas Pacific Land Trust‘s spinoff of minerals under TPLT’s lands, subsequently acquired by Texas. It owns fee minerals in those lands. Click on image to enlarge. As Forbes says, ripe for consolidation.

Published on: February 4, 2019

Exxon and Chevron in the Permian

By John McFarland

The big guys are moving into the Permian Basin.

Chevron, which owns substantial fee minerals in the Permian, saw its profits jump 19 percent in the fourth quarter, increasing its oil production 71 percent in the Permian to 310,000 bbls/day. Chevron’s completions in 2018:

In its DR State Wise Unit in Culberson County, Chevron has completed or is drilling seven two-mile laterals.

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Published on: December 27, 2018

Takeaway Capacity in the Permian and Reflections on Judicial Elections in light of Murphy v. Adams

By John McFarland

Wade Caldwell, San Antonio attorney and President of NARO-Texas, published the article below in the recent NARO newsletter. He has kindly allowed me to republish it here.

And Happy New Year.

The Take Away

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Published on: November 26, 2018

Huddleston on Shale Plays in Texas

By John McFarland

Peter Huddleston, President of Huddleston & Co. and a prominent petroleum engineer and a friend, agreed to report on the status of shale plays in Texas at our firm’s land and mineral owner seminar on November 9. He kindly agreed to let me use some of his slides. You can click on all images below to enlarge.

Peter’s presentation concentrated on developments in the Eagle Ford and the Permian Basin, by far the sources of most drilling in Texas today.

The map below shows the extent of the Eagle Ford formation.