Saint Rita of Cascia (Italy), later to be known as the Patron Saint of the Impossible, left this earth on May 27, 1357. Exactly 466 years and one day later (May 22, 1923), a well named after her, extending about 3,050 feet into the earth she’d left, began alternately flowing, and blowing out, for about two weeks before being brought under control. This well showed that at least one cause was no longer lost. Oil had been found in the underground formation known as the Permian Basin, after 646 days of a drilling process that managed only about 4.7 feet per day of progress. The well was near the tiny west Texas town of Texon, more than 100 miles from any other producing oil well.
Although not the first Permian well, Santa Rita Number One was the one that showed the world that the Permian might hold oil in quantities worth pursuing.
People with names like Yates, Abell, Hogan, Mitchell, Parsley, Patterson, Richardson, Turner, and many more over the years scanned seismic charts, raised funding, hired crews, and brought that oil to the surface. By 2019 or thereabouts the Permian Basin had become, probably, the most prolific basin in the world, based on daily production.
Probably?
While Permian numbers are easy to follow, tracked by a number of public agencies, the Saudis are more guarded about reporting production from any particular field. For years, their Ghawar field had been considered the world’s most prolific, with experts believing it produced about 5 million barrels per day. But no one knew for sure.
Then in 2018 Saudi Aramco, the national oil company, was seeking investors in a bond issue. The issue’s prospectus told the world that Ghawar was producing about 3.8 million barrels per day. Many U.S. analysts took that to mean that its production had peaked, and was falling fast, said Robert Rapier in a Forbes article dated April 5, 2019. For the Permian, as far back as January of 2019 the region was producing 3.96 million barrels per day. For December of 2022, production was expected to hit 5.499 million barrels per day, a new all-time record. In fact, the Permian has been setting monthly production records every month since December of 2021.
While no one knows the current Ghawar production, many believe that it is continuing to drop due for several reasons, including the fact that OPEC+ in general and the Saudis in particular cut production in 2020 due to the pandemic. Then, after slowly ramping back up through 2021 and early 2022, the field again reduced production in late 2022 due to concerns about COVID in China and fears of a recession across much of the world.
In the Beginning—Faith Against All Odds
The full story of Santa Rita #1was recounted in this magazine in 2017 by Bobby Weaver, but here’s the short version. In 1919, El Paso natives Frank T. Pickrell and Haymon Krupp purchased the lease where the well would be drilled from the original lessee, who was about to let it expire. The two paid $2,500.
In the process of raising money to do the drilling, Pickrell and Krupp engaged a New York group to sell shares of stock in the venture. Because of its great distance from the nearest existing production, many people considered this well to be a very long shot. Impossible, you might say. In his 2017 PBOG Magazine story, Weaver quotes Pickrell from an interview the latter did in 1969.
“The name Santa Rita originated in New York. Some of the stock salesmen had engaged a group of Catholic women to invest in the Group 1 stock. These women were a little worried about the wisdom of their investment and consulted with a priest. He apparently was also somewhat skeptical and suggested to the women that they invoke the help of Santa Rita who was the Patron Saint of the Impossible! As I was leaving New York on one of my trips to the field two of these women handed me a sealed envelope and told me that the envelope contained a red rose that had been blessed by the priest in the name of the saint. The women asked me to take the rose back to Texon with me and climb to the top of the derrick and scatter the rose petals, which I did.”
Defining the Permian Basin
Geologically speaking, the Permian’s history goes back much further than any date in the 1920s, or even the 1300s. Spanning a period from about 298.9 million years ago to 251.9 million years ago, the region was the floor of a sea—hence the term “basin.” This was during the end of the Paleozoic Era.
Those geologic formations were first identified in 1841 by by geologist Sir Roderick Murchison, who named it after the region of Perm in Russia. Apparently even the surface resembles that area—Odessa, founded in 1881 as a Texas and Pacific railroad stop, may have been so named by railroad workers reminded of their home in Odessa, Ukraine.
Most analysts, including the Texas Railroad Commission, define the Permian as covering an area approximately 250 miles wide and 300 miles long in western Texas and southeast New Mexico. There are more than 7,000 fields, producing from formations including Yates, San Andres, Clear Fork, Spraberry, Wolfcamp, Yeso, Bone Spring, Avalon, Canyon, Morrow, Devonian, Ellenberger and others. Its top basins include Midland, Delaware and Central.
However, it is important to some folks to note that the Permian Basin name applies only to the rock formations below the surface. Longtime Midland naturalist and founder of the city’s Sibley Nature Center, Burr Williams, is known for pointing out that Midland/Odessa and the surrounding areas are actually at the south end of the Llano Estacado, or Staked Plain.
“Oil All Over Your Address”
In the 1956 Broadway musical Most Happy Fella, the song “Big D” announces:
“You’re from Big D
My, oh Yes
I mean Big D little a, double l-a-s
Big D, Dallas
Where every home’s a palace
And there’s oil all over your address.”
In truth, oil being “all over your address” is more likely on ranches near Odessa, Midland, Andrews, Big Spring, Pecos, Fort Stockton, Hobbs, NM, and other Permian cities whose names are less poetic.
As oil production grew over the decades, the aforementioned Llano Estacado designation gave way to the Permian, those with oil on their address began to change from simply farmers and ranchers to royalty owners, entrepreneurs, and philanthropists. It was not unusual to see a ranch truck pull up in front of Midland’s First National Bank, its overalls-clad driver getting out to deposit a royalty check worth many times what his agricultural endeavors had brought in.
Riding the Production Roller Coaster
In 1920 the population of Midland was just a few thousand. By the 1940s it had grown to around 20,000, and Odessa was generally in the same category.
The 1943 discovery of oil in the Spraberry formation started a rush to that field, based on what turned out to be somewhat inflated hopes. Perhaps the original tight oil formation, the Spraberry’s wells began their producing life well, but quickly tailed off before providing payback of investment. Nevertheless, the population of Midland exploded from 21,713 in 1950 to 62,625 in 1961, based at least partly on Spraberry expectations.
During the era of conventional vertical wells, production continued to generally increase until 1973, when it peaked at 790 million barrels for the year. As oil became an international commodity—and sometime geopolitical weapon—the sweet spots were drilled up and production declined as the industry romanced the cheaper Arabian oil. A brief boom from 1979-82, seeing prices rise to a then-impressive price in the $35 per barrel range, brought some interest back to the area, but a prolonged era of low prices, extending from 1983-2001, sent investment to more profitable arenas, allowing production to continue to drop. Conventional wisdom in the early 1980s held that the Permian had about 20 years of recoverable oil left.
Cracking the Frac Problem
The key to that last sentence is “recoverable.” Geologists knew there was much more oil down there, locked in “tight” formations of shale. But there was no economic way to get it out—yet.
Sliding along under the radar was a procedure that would turn those predictions upside down. Starting back in the 1940s a technique known as fracturing—pumping water, chemicals and sand downhole to prop open pores on those formations—had begun to show promise. But it would require almost 60 years, and the dedication of one man—George Mitchell—to make it profitable on a large scale.
Its rise to common use began in the late 1990s. Mitchell had invested years and millions of dollars in research, and in that decade it finally began to demonstrate profitability. Even then, it took a worldwide crisis to bring it into common use.
In June 2008, the oil price reached a record $140 per barrel. Shortly thereafter the worldwide financial crisis crashed prices, closing the year at $44.60. By yearend 2010 the price had shot back up to $91.38. At that level, a lot more production techniques were profitable, including hydraulic fracturing. A new boom of drilling and fracturing began.
By 2017 production smashed the old record by more than 25 million barrels, finishing the year with 815 million barrels. It was then that the Permian began to challenge, and now to surpass, Ghawar for top ranking in the world.
Total production over the century of activity has been impressive for the Permian. Enverus estimates that more than 30 billion barrels of crude have been recovered over that time, “with experts predicting that there are at least 20 billion barrels remaining. Production hit a peak in the early 1970s due to the Arab oil embargo before steadily declining to a low after the 2008 recession.”
The Future
Analysts today are concerned that production growth is slowing. Even with fracturing, tight formations still horde up to 90 percent of their oil. But industry veterans who remember the “20 years of economic oil left” of the 1980s may see a brighter future. This time the rush is on to develop enhanced oil recovery (EOR) methods to go back into formations considered depleted, to reach past the 10-25 percent production levels. Innovators are testing procedures for revitalizing even shale plays, which historically have resisted any EOR methods.
And, of course, should prices rise due to wars, lack of investment, or other issues, more EOR techniques would become viable—and necessary.
Paul Wiseman is a freelance writer in the energy sector. His email address is fittoprint414@gmail.com.