Energy analysts predict slowdown in Permian Basin production

Oil marketing analyst Energy Security Analysis Inc. indicated this week that production growth is declining in the Permian Basin and it blames the lack of crude oil pipelines to move the product to the coast.

ESAI’s evaluation showed while Permian basin operating costs fell 6 percent in the second quarter of the year, the overall full-cycle breakeven costs are nearly 30 percent more because of increased capital spending.

“Acreage consolidation is key for achieving scale and will be critical to some producers’ bottom lines, but it comes at a cost,” said Elisabeth Murphy, an energy analyst for ESAI. “Permian acreage can be expensive.”

She and others at the company predict the number of well completions will continue to drop and as a result, there will be lower production growth next year in the basin. The number of drilled but uncompleted wells in the basin indicates the potential for a production rebound later in 2019.

Still, ESAI Energy is predicting Permian production growth to slow significantly next year compared to the growth of more than 800,000 barrels a day in 2018.