Scott Sheffield, the outgoing chief of Pioneer Natural Resources, told Bloomberg that pre-tax production costs in the massive Permian Basin of West Texas have fallen to $2.25 a barrel.
“Definitely we can compete with anything that Saudi Arabia has. We have the best rock,” he said, adding that improvements in drilling technology and data analytics have “changed the cost calculus faster than almost anybody thought possible.”
The Permian is said to have the capacity to expand from 2 million to 5 million barrels per day “even if the price never rises above $55,” and is comparable to the giant Ghawar field in Saudi Arabia, Sheffield said.
Sheffield said Pioneer can have a new rig up and running in 135 days, while deep-water mega-projects can take seven to 10 years.
New technology has enabled Pioneer to cut production costs by 26 percent over the last year and is adding five new rigs despite oil prices remaining in the low $40s.
“This sets the stage for an oil shortage and a price spike later this decade. Whether OPEC can survive that long is an open question. Most of the cartel need prices of $100 to fund their regimes.”
Full article: Report: Texas shale can ‘compete with anything Saudi Arabia has’ (World Tribune)