The "Secret" Permian Basin
Oil prices dashed higher yesterday following reports of a U.S. spy drone shot down by Iran.
President Trump responded to the strike in a tweet with a single sentence, saying, “Iran made a very big mistake!” Later reports said President Trump approved a military response but then abruptly called it off for reasons that are still unknown.
WTI crude for August delivery was last seen trading at $57.60 per barrel, up more than 10% since initial reports of the downed drone.
Oil traders are wondering what's next. But it's still not clear whether the military pullback was strategic or logistic. And it's still unclear whether Trump will renew strikes against Iran.
In fact, the authenticity of the whole story has even been called into question. The Pentagon initially denied any U.S. drones being in Iranian airspace. And there is speculation Iran used “deep fake” photos to provoke the entire incident.
But here's what we do know: Tensions with major oil-producing nations will likely continue to lead to higher oil prices.
And as long as there's no hot war, that's good for America.
The United States is now the largest oil- and gas-producing nation in the world. The nation still consumes more oil than it produces, so it still needs imports. But our foreign dependence on oil is now at a 30-year low.
And that's all thanks to the development of tight oil and gas resources in states like Texas.
Texas is home to one of the most prolific tight oil and natural gas geologic basins in the world: the great Permian Basin.
The Permian Basin has long been known to contain massive energy resources. But it wasn't until the mid-2000s, with the advent of the new technologies hydraulic fracturing and sideways drilling, that the Permian Basin's resources became available to producers.
Today, the Permian Basin is the largest producing oil field in the world, even bigger than Saudi Arabia’s Ghawar. The EIA reports oil production from the Permian currently at 4.2 million barrels per day. That's compared to Ghawar's production of 3.8 Mbbls/d.
The Permian Basin is not only the largest oil and gas region in the world right now in terms of production, but estimates of its underdeveloped energy resource are growing.
The United States Geological Survey recently reported an increase in technically recoverable resources from the Permian. The USGS now says the Texas Permian Basin contains 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 19.9 billion barrels of natural gas liquids.
The Permian Basin has become the crown jewel of the American energy industry. But here's the thing most people don't know... the little secret Texas is hiding...
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The Permian Basin is one of a small handful of other undeveloped oil and gas basins.
What that means is there could be more tight oil and gas in and around Texas than anyone ever thought, just waiting to be discovered and developed.
Resident Permian Basin expert Keith Kohl says, “For sure, there are billions of barrels of recoverable oil in and around the Permian Basin that haven’t even been counted yet. Potentially trillions of dollars just waiting to be found.”
Right this minute, the Texas Permian is booming with activity. So much, in fact, that infrastructure around the area is being strained. Local authorities are dealing with electricity, water, and housing shortages as well as heavy truck traffic and quickly deteriorating roads.
Soon developers are going to be looking elsewhere. And that's when these secret oil and gas basins in and around Texas are going to explode in popularity.
Keith Kohl has recently published an entire report that discusses these “secret” oil and gas basins in Texas. I highly urge you to look into these alternative basins before Main Street learns about them.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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