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Permian Basin Leads Shale Drilling’s Coronavirus Collapse

Coronavirus Oil Collapse Felt in Permian Basin | New Mexico Oilfield Accident Lawyer

Shale drilling regions across the United States continue to reel from  coronavirus shutdowns and cratering oil prices, but none have been as hard hit as the once-prolific Permian Basin.

According to the most recent Drilling Productivity Report, production in the nation’s leading shale regions is set to fall by 197,000 barrels per day (bpd) in June compared to a year earlier. In the Permian alone, production could ebb by as much as 87,000 bpd, while the remaining losses will hit the Eagle Ford (-36,000 bpd), Anadarko (-28,000 bpd), Niobrara (-24,000 bpd) and Bakken (-21,000 bpd) shales.

“We drove out here and usually you would see with all these good wells that historically have done a lot of production, they would usually all be pumping,” one Permian Basin oilfield worker recently told NPR News. “They look like caterpillars all running across the landscape. And that’s not happening right now.”

240 U.S. Energy Companies Expected to Go Bankrupt

COVID-19, the novel coronavirus, has sickened more than 4.8 million people worldwide, killing over 328,000.

While months-long lockdowns are beginning to ease in some parts of the world, the ongoing pandemic continues to force most people to remain close to home and curtail non-essential travel. As a result, the world’s seemingly insatiable appetite for oil and gas has all but collapsed.

As recently as January, oilfield workers in the Permian Basin could still command six figure wages. But with the price of West Texas Intermediate hovering well below the $38 per barrel needed to turn a profit, drillers are shutting in wells across West Texas and southeast New Mexico, and thousands of workers have already been idled or are anxiously awaiting their pink slips.

According to the Houston Chronicle, Rystad Energy, a Norwegian research firm, is now predicting that 240 energy companies in the United States will seek bankruptcy protection over the next two years if oil prices remain near $30 per barrel.  Several – including Whiting Petroleum, Skylar Exploration, Diamond Offshore, Freedom Oil and Gas and Gavilan Resources – have already done so.

Permian Basin Oil Boom Won’t be Back Anytime Soon

While oil prices have shown some signs of recovery, most analysts aren’t expecting a complete turnaround until the market can sustain $45 per barrel. Even then, the Permian Basin is unlikely to experience a repeat of the boom years anytime soon.

The nation’s shale production “will have much, much more measured growth, which Wall Street has an appetite rather than the ‘growth at any cost’ of earlier days,” Sarp Ozkan, director of energy analytics at Enverus, recently told the Midland Telegram-Reporter. “This will be shale 2.0 or shale 3.0. It will look a lot different than the unprecedented growth that made us the No. 1 producer in the world.”

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Our Undefeated Oilfield Accident Lawyers are monitoring the impact of the coronavirus pandemic on Permian Basin workers and their families, and will continue to post updates on the latest developments.

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