https://www.zerohedge.com/political/drill-baby-drill-pragmatic-approach-energy-independence These sorts of articles are almost always written by people who know very little about oil and natural gas and the effect of resource depletion on production predictions. They have never experienced depletion in real life, have never known the negative affects of it from a financial standpoint (paying the bills) and refuse to look at depletion even from a worldwide historical perspective. All oil fields since the very beginning, deplete; read The Prize. This year alone I have read a hundred articles just like this one and none of them even mention the word depletion. They hardly mention decline anymore. The general public has been lied to so many times, by so many diffferent "experts" about oil and natural gas abundance in the U.S., it is essentially brainwashed. The primary source of oil production growth in the entire world the past seven years has been from HZ unconventional wells in the Permian Basin, above. This phenomenal production growth has come from just six shalely carbonate resource beds (straigraphic sections) in the Permian. There are over 55,000 producing wells in these resource beds; over half of these wells drilled since 2014 now make less than 25 BOPD and 120 BWPD on artificial lift and are declining exponentially at the rate of 12% annually. They will reach economic limits and have to be plugged in the next 8 years. Sooner, unless operators can find more sub-surface formations to inject 22 MM BPD of produced water into, New HZ wells being drilled today in over drilled, pressure depleted core areas suffer 85% decline rates in the first 24 months of production life. No Permian HZ shale oil well will have a 30 year life span to generate these kind of BOE, EUR's in the map above. 766,000 barrels of oil, each?! Gimme a break. Niney one percent (91%) of all Permian HZ tight oil production comes from just 8 partial counties in the Basin and there are wells drilled in these core areas that are producing in the same bench (stratigraphic section) that are only 500 feet apart. They communicate with each other. As these formations suffer pressure depletion from over drilling they produce more gas and less liquids. An LSU graduate geologist commented on LindedIn a few days ago that oil resources in the Permian Basin are inexhaustible. Good grief. A geologist! Almost everyone working in the United States domestic oil industry these days works in the unconventional shale sector. They need for the American public to believe the shale phenomena will last another 20 years or more, it just needs fewer regulations and more low interest capital to borrow. People in the sector, or cheerleading for it, don't want you fussin' about oil and LNG exports to foreign countries, or flaring, or earthquakes, or methane, or 3% dividends and they will never utter the word, depletion. EVER. The United States only has 4% of the world's proven, producing oil reserves, yet it is the biggest oil producer in the world and the 3rd biggest oil exporter in the world. 48% of America's oil production comes from the Permian Basin HZ play. America can't seem to drain this area fast enough. There is nothing "pragmatic" about energy independence, whatever that means, when you look at how crowded the Permian Hotel already is.

Here is Novi's take on longer Permian laterals, just out. I need to make sure people see this, and a comment from Christine Guerrero on LinkedIn about longer laterals from Rystad. You can read about it here on Lindkin: https://www.linkedin.com/posts/ted-cross-tx_long-laterals-are-more-important-than-ever-activity-7265006855918149632-L29u?utm_source=share&utm_medium=member_desktop Strong economics is qualatative. No well costs mentioned for us to make up our own mind on economics; just a reminder that gas and gas liquids is approaching 50% of the production streams from new Permian wells and WaHa is still a negative number. Black lines are plus 3 milers and those EUR's are lower, as I have suggested many times. No word on how many of these super long laterals there are to drill in the Midland Basin, or out West...not many left, IMO. Increased lateral length has been a major driver of improved per-well productivity and drilling efficiency numbers that have driven solid 2024 production. With 4-mile tests now coming online, extended laterals are more important than ever in the Permian. Improved per-well productivity means on an IP90 basis, as I pointed out in my post...not by EUR. Higher up front cash flow gets to payout faster, but does NOT necessarily make more money in the long term. Novi likes 2 year payouts as that is the basis for much of their remaining drillable location predictions. So, it likes longer laterals because they pay out faster. I stayed in the oil business for over 50 years, as a producer, never borrowing money to drill a well, ever, by liking EUR's and ROI's. I liked the 25:1 ROI's the best !😁

https://www.hartenergy.com/exclusives/harold-hamm-drill-baby-drill-faces-geology-barriers-even-under-trump-211109?utm_source=linkedin&utm_medium=social&ref=linkedin.com Funny thing, this Hart article. Now that the elections are over, the drill baby, drill squad is confessing to the fact that American gasoline prices cannot be slashed in half by increasing U.S. tight oil and exporting it all around the world. Well, no shit. Hamm is not the only one to now be crawfishing, but a big one; Kudlow, Woods and several others, all the same thing. Even Trump now says we have an "abundance of liquid gold" in our country instead of " we have more liquid gold under America than anybody in the entire world." You can google all that. I would expect this all to leave a lot of working class Republicans scratching their heads wondering, WTF?!! Just kidding, the pundits will say; thanks for playing! I don't think the Permian has another 2.0 MM BOPD in it knowing that 4.5 MM BOPD has to be replaced every year from legacy decline. Exported, and diluted over the world oil market, an additional 2.0 MM BOPD of U.S, tight oil, sustained for six months, would have only a minumum effect on U.S. gasoline prices. 40 cents, tops. And where 'o where are they going to put all that produced water to make another 2-4 MM BOPD and reduce the cost of gasoline by half in the U.S? Politicians lie and don't think a thing about it. They then spend the first 2 years of their new term to spin the lie. Americans are about to find out what the meaning of "peak oil" actually was. It was never about running out of oil; that was dumb. It was always about struggling to produce enough "AFFORDABLE" oil to meet demand. Well, we're there. man. I am hopeful the first 2 years of this new Administration will finally, FINALLY, open some eyes. Depletion shows its ugly self in many forms, like lousy well economics, falling liquids productivity, rising GOR, more gas representing the percentage of production stream and...water, water everywhere. Hey, its just life. All oilfields deplete. Even the Permian HZ play. Only the liers making money from it all told you it was never going to end.

I was hoping to get this cabinet post and am truly mule lipped I didn't. Jim Brooker, a PE from the IB would have been a great choice. I guess if you want to drain America as fast as possilble its a good idea to put a frac hand in charge. IMO at any price less than $90 oil and $5 gas we only have 4-5 more years of affordable shale oil left in America. Now, with this cabinet pick for DOE, and the great Drill Baby, Drill plan, that 4-5 years of remaining affordabble oil will be 3-4 years, maximum. Harold Hamm has a lot more to do with Trump's energy policies than imaginable and has convinced Trump we have more liquid gold under America than Saudi Arabia has under its country. Thats dumb. This Wright pick is a Hamm pick, make no mistake. America is going to need ALL forms of energy, from its light tight oil and its natural gas, to nuclear to yes, even wind and solar. All of it. The people in charge of this mess are going to leave us woefully short because their timing is all messed up. We'll out of one source before any other sources are viable, and affordable to the public. The drill baby, drill crap is a big risk to our future. Shale oil buys us time. but exporting the stuff takes that time right back away from us.

Longer Laterals Are Leading To Temporary Production Increases Basin Wide Permian Basin tight oil production surprised to the upside in 2023 for two reasons, none of which had anything to with greater "rig efficiencies" or "technology improvements." Production went higher than folks thought, in spite of lower rig counts, because over 430 drilled but uncompleted wells (DUC's) were completed in 2023 and lateral lengths increased. Rigs just drill holes in the ground, some faster than others. Permian completions have been remarkaby consistent since April of 2023.[1] Remaining DUC counts in the Permian that might be economical to complete at $80 oil prices and $1 associated natgas prices are now depleted. Oil production is surprising to the upside again, in 2024, and the Permian is still growing, be it ever so slowly, because of increased lateral lengths. Well economics are very, very marginal with associated gas prices around $1 per MMBTU and everyone is trying as hard as they can to get the most bang for the D&C costs. The results are higher IP90's, then much faster decline rates. They bigger they are, they harder they fall. Above is a chart from World Oil Magazine [2] showing increases in footage per wells being drilled; the TVD to various benches in both sub-basins of the Permian are fairly consistent, increases in TMD footage are increases in lateral lengths. New Mexico is Lea and Eddy Counties; TRRC District 7C is mostly the Delaware Basin and some important counties in the Midland Basin, District 8 is the Midland Basin. Please note the percentage of increase in District 8 the past three years; that is entirely a function of having NO room to drill longer laterals in the core of the Midland Basin. There IS some cubing going on in Midland County, by Exxon, though it does not seem to be a lot, that too most certainly be a function of how many wells Pioneer drilled in its block before bailing out. Cubes would definitely be adding to production levels on a per well basis. Shell drilled what it called "horseshoe" wells several years ago because of limited space for supposedly more cost effective long laterals and Matador is now bragging about "U" wells, I assume also being tried because of lack of space. Above is the corresponding chart to Table 1 provided by World Oil Magazine [3] showing the percentage of increases in production related to increased lateral lengths. As we can see, all sub-basins in the Permian increased production dramatically the past 3 years and, as we have discussed here on OSC many times, Lea and Eddy Counties in New Mexico have led all growth in the Permian since 2020 by a significant margin. The productive limits of the Delaware Basin in New Mexico are mostly all Federal (BLM) land of wide-open spaces and more conducive to longer laterals, higher production, and the ability to sustain production levels. It's some better rock, but mostly vast room to drill longer laterals. New Mexico Federal lands have lower royalty burdens and OPEX is lower because, for the most part, it sends all its produced water to Texas where we inject it and suffer the consequences. Like 5.0 earthquakes. "Over in neighboring New Mexico, gains in footage drilled per well and oil production have been impressive. The footage drilled per well has jumped 24% higher, from 15,000 ft in 2020 to 18,600 ft in the first half of 2024. The state’s oil production certainly has responded to the longer wells. Output is up an impressive 93%, from 1.027 MMbopd in 2020 to 1.981 MMbopd in first-half 2024."  Consider that the S.W. portion of Lea County, and the S.E. portion of Eddy County have grown tight oil production 93% the past three years, still have 31% of all HZ rigs working in the Permian Basin (Eddy, 55, Lea, 40) and produce 2.1MM BOPD, representing 30% of all Permian tight oil production. The vast majority of Lea and Eddy County tight oil production comes from two benches in the Bone Springs (green, above). There are currently 11,619 producing HZ tight oil wells in this small area of New Mexico. Remove these two partial counties from the mix and the Permian would be in steep decline. All of these longer laterals in the Permian Basin are being high-graded in Tier 1 and 2 level sweet spots and 85 plus percent of those lateral targets are in the same, most productive benches in both sub-basins, the Wolfcamp and the Bone Springs in the Delaware and the Wolfcamp and Lower Spraberry in the Midland Basin (Enverus, EIA, Novi) New Mexico has a lot of room to drill super long laterals if, that's the ticket; Texas not so much, Above is a Texas Railroad Commission GIS map of Midland County in District 8. This is part of the Saudi America that Exxon just bought from Pioneer Resources. Midland County has 22 rigs running in it and 21 of those rigs belong to Exxon, still operating these wells under the name Pioneer. On a larger scale which you can create by clicking on the little thingy, upper right, you can see blue dots. Those represent pending drilling permits, all of which belong to Exxon. For the record, Midland County is suffering from post-bubble point GOR issues and liquids well productivity is tanking from pressure depletion. Exxon, nevertheless, is hell-bent on drilling themselves out of a bad acquisition, in my opinion. And where they can find the room its lateral lengths are long and getting longer. Which ain't easy... Here is a drilling permit filed by Exxon (Pioneer) for 13,600 foot lateral in Midland County. This is an illegal allocation well whereby leased mineral owners are forced to pool their acreage into this Tredaway Elkins Unit so Exxon can drill this long lateral. The TRRC allows allocation wells, even though in Texas we do not have forced pooling laws. Allocation wells are sort of a non-issue (90% of the time) because all mineral owners just want more royalty. 10% of the time mineral owners may object to an allocation well, but they're only recourse is to file suits, which there are numerous in Texas courts all waiting for the Texas Supreme Court to rule on. In the mean time, they ARE illegal. The TRRC allows them anyway. Note how irregular the so called, "pooled unit," is in the plat above. This Exxon permit application is also an exception to SWR 37 for distance from first take point to the unit line. The applicant will have to give notice to all affected parties and those parties will have the right to protest the permit. They won't, of course, because they all want more royalty. Rule 37 exceptions are becoming common place with allocation wells, or production sharing agreements. My intent in showing you this W-1 plat associated with Exxon's permit is so that you will see how crowded it's getting out there, particularly in the Midland Basin, what an operator has to do to get a long lateral actually drilled, and that they are running out of room in these core counties, like Midland County. I looked at the TRRC permit query for Midland County and 92% of the HZ wells permitted in the country in 2024 are Exxon's and 60 plus percent of those wells are allocation wells. The majority of wells getting permitted in Martin County to the north are allocation wells. Midland and Martin are the two most productive counties in the Midland Basin. So, clearly, at least to me, rig efficiency, or more wells drilled with fewer rigs, has nothing whatsoever to do with there still be growth in the Permian Basin. Oil production in the Permian Basin is still growing slightly in 2024 because fewer rigs are drilling longer laterals. These longer laterals decline much faster than older, shorter lateral wells drilled on wider spacing; in the Permian Basin, 73% the first 11 months of production, up from 47% in 2019, left. As long as the number of completions remain the same in the Permian Basin, and those new wells are in excess of 10,000 TMD, production will appear to be growing because IP90's are higher. When they run out of room to drill longer laterals, and they will, the steeper decline rates of "new" wells are going to kick in, hard, and Permian production is going to drop very quickly. More rigs will then be its only savior. Unless you want to grow up and own working interest it HZ tight oil wells in the Permian, the ONLY metric that should matter to you is EURs. [5] Data-sell companies like to calculate remaining drilling locations under a host of funky metrics, and spacing options; nobody talks much about how many of these long, Permian runways there are left to drill in the core areas. [1] [2] [3] https://www.worldoil.com/magazine/2024/october-2024/special-focus-advances-in-drilling/u-s-footage-drilled-per-well-continues-to-creep-higher/ [5] Regarding productivity, although type curve oil production volumes increase for a 3-mile lateral compared to a 2-mile lateral well (Figure 2), the cumulative oil production per foot deteriorates for extended lateral wells (Figure 3). L. Sanchez; https://www.tgs.com/weekly-spotlight/10-13-2023#:~:text=Drilling%20extended%20lateral%20wells%20(%3E15%2C000,reservoir%20navigation%2C%20and%20hydraulic%20fracturing. Think of it like a big, giant parking lot with very few empty spots left. I choose to write about the Permian Basin HZ tight oil play because it is the single largest source of crude oil and condensate growth in the United States... and in the entire World. Like all oil plays, unconventional resources in the Permian are now depleting and I am concerned about oil and natural gas exports from the United States and our nation's long term energy security. We should be conserving these hydrocarbon resources for Americans. For our kids future. The sooner we come to grips with depletion, the better; in the end, those nations with the most remaining natural resources, win.