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As Coronavirus Shutdowns Ease, Permian Basin Appears Poised for a Comeback

Coronavirus Shutdowns Ease, Texas Oil Shows Signs of Recovery | Midland Odessa Oilfield Accident Lawyer

Months after the coronavirus pandemic forced much of the world to remain at home and severely limit non-essential travel, there are signs the struggling Permian Basin could be poised for a comeback.

Permian Basin Drilling Permits Surge in Texas

According to the Houston Chronicle, 42 companies filed 109 new drilling permits with the Texas Railroad Commission during the week of June 3rd through 9th, more than double the filings from just a week earlier.

Nearly half of the permits seek to drill new horizontal wells in West Texas.

The surge in new drilling permits marked a significant turnaround for the Permian basin, which just a few weeks ago lost its designation as the top destination for frac crews in the United States.

As the coronavirus shutdowns sharply curbed the world’s appetite for oil and gas, the price of West Texas Intermediate quickly fell well below $30 per barrel and even wandered into negative territory for a brief period in April.  No longer able to turn a profit, energy companies shut-in hundreds of wells across the Midland-Odessa region, and thousands of Permian Basin oilfield workers watched helplessly as their once-lucrative jobs disappeared.

Drillers Signal Renewed Interest in Other Texas Energy Regions

Now that much of the world has begun easing coronavirus restrictions and life in many places begins to return to something resembling normal, drillers are showing renewed interest in the Permian Basin and other energy-producing regions across Texas.

Irving, Texas-based Pioneer Natural Resources led the rush to open new West Texas wells, filing 23 drilling permits that target the Spraberry field in Midland and Martin counties. Fort Worth’s Double Eagle Development is also looking towards the Spraberry field and filed 12 permits for new wells in Midland.

WPX of Tulsa, Oklahoma, hopes to drill 10 new wells in the Wolfcamp and Bone Spring formations on state-owned lands in Ward and Loving counties, and Midland-based Diamondback Energy filed permits for five wells in Pecos, Reeves, and Martin counties.

Meanwhile, Houston-based Callon Petroleum filed permits for two new wells in the Eagle Fords’ Eagleville field, and Comstock Resources sought to drill a new natural gas well in the Haynesville shale. Total, a French oil major, apparently has plans to recomplete an old horizontal well located in the Newark East field of the Barnett, and Beeville-based Dan A. Hughes Co. is looking to open a new vertical well in the Stillman field in the southwest corner of Kenedy County.

Persistence of Coronavirus Leaves Oil Market on Shaky Ground

While the uptick in new drilling permits is certainly encouraging news for Texas oilfield workers and their families, an impending energy market recovery is by no means guaranteed. In fact, oil prices tumbled more than 4% this morning as health officials warned the coronavirus pandemic would persist for the foreseeable future.

Over the weekend, a cluster of new infections forced Chinese authorities to shut down a produce market and lock down large sections of Beijing, a city that had gone nearly two months without a single, new case of localized transmission. And in the United States, surging rates of infection in 22 southern and western states – including Texas, Florida, Arizona, and California — led to concern that some had reopened too quickly and warnings that new lockdown orders could be on the horizon.

“Naturally reports of spikes in new cases in the U.S., China and Japan aren’t helpful for crude price,” Craig Erlam, a senior market analyst at Oanda, wrote in a report issued earlier Monday morning.

“Oil prices will remain very sensitive to [the] evolving COVID situation, despite the best efforts of producers around the world to rebalance the market.”

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Our Undefeated Oilfield Accident Lawyers are monitoring the effects of the coronavirus pandemic and global lockdowns on the Permian Basin and other Texas oil-producing regions and will continue to post updates as new information becomes available.

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