DUG Permian Review: Infrastructure Concerns As Activity Rises

Growing takeaway capacity concerns as production and activity continues to rise. These are the discussions heard at the DUG Permian Basin conference and exhibition in Fort Worth. This is an in-depth look at the buzz surrounding the Permian Basin and what sets the basin apart.

“I think it all starts with geology. There are so many other things that can get in the way of good geology. Good geology is really the foundation of what the Permian is based on. Without really good rock, it’s hard to build a great foundation. We have proven both on the Midland side and the Delaware side that the geology is there. Now it’s a matter of transitioning from great inventory to great value,” said Clay Gaspar, president and COO of WPX Energy.

Greg Andrews of Express-SS Industries said,“The show is very active, a lot bigger than I thought. This is my first time coming and I am starting to see the Eagle Ford and Permian is picking up. We are quoting more items, we are seeing more people quote to order a little bit faster and our business is up 60% year over year just in the Permian.”

“It’s the basin that keeps on giving,” remarked Cory Richards, CEO of PT Petroleum LLC.

That’s the positive tone the industry has been waiting to see again. however, with activity ramping up in the Permian, companies are facing infrastructure and water management challenges.

Melissa Robinson of Roywell LLC knows that from living and working in Midland. “That’s kind of key right now, how do we move water, how do we move oil. We are pumping it out from Midland, we got to move it. So that’s definitely one of the big things all of these companies are highlighting. 

“One of our clients on our marketing business is potentially Hobbs, N.M. Hobbs is trying to catch the overlap of the Permian. What’s going on in the Permian, there is so much activity there, infrastructure can’t keep up. There’s not enough hotel rooms, if you have driven out there you know what the traffic is doing. There are a lot of cities surrounding the Permian that are trying to get involved,” said Josh Lowrey of Sky High.

“On the optimism side, higher prices support broader development. On the negative side, we are a victim of our own success we are developing bottlenecks in getting crude and natural gas out of the Permian Basin, and thus our differentials, in other words what we get paid relative to the benchmarks has widened,” said Steve Pruett, president and CEO of Elevation Resources.

Some companies may take a look at their Permian Basin operations, evaluate what it takes to move product, then make decisions based on what they think will be most beneficial. Mark Whitley, founder and CEO of Chisholm Energy Holdings said, “It all fits together, the infrastructure of gathering oil and gas, the infrastructure of moving things like water and sand, they go together. We have decided not to go into the sand sourcing business. That’s just another level of complexity. We really aren’t staffed to do that. We could be and maybe somewhere down the road. One thing that you learn with being in the business for 42 years is that you learn to never say never. What we thought was impossible many years ago is now just taken for granted.”

A final takeaway from the 2018 DUG Permian Basin conference is the importance of paying attention and working with others. Cory Richards, CEO of PT Petroleum said, “We are a private company and quite small in comparison to others. We pride ourselves on being top notch technical students. We analyze existing data as much as we can. You have to extract as much understanding as you can from the existing data. We are a big proponent of trading data with other operators and believe firmly that helps accelerate the pace of progress with technology.”


Jessica Morales

Jessica Morales is the video reporter for Hart Energy. She contributes to the Digital News Group's interviewing and video production. 

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