As Permian Basin experiences bottlenecks, companies look to fields in Colorado, North Dakota, Oklahoma and Wyoming
Shale drillers are ramping up production in the U.S. as oil prices rise, moving beyond the West Texas oil field that became the country’s drilling center.
From Oklahoma to North Dakota, companies are increasing investment in oil fields that fell out of favor several years ago, as $70-a-barrel crude prices make fracking and horizontal drilling economical in more places again.
While the Permian Basin in Texas and New Mexico remains the fastest-growing shale spot, congested pipelines and shortages of labor and materials there are crimping profits, making other fields attractive alternatives.
EOG Resources Inc.,ne of the shale sector’s leaders, is active in the Permian but also in Colorado, North Dakota and Oklahoma. In Wyoming, the company has built up larger lease holdings and expanded production over the past two years.
Chief Executive Bill Thomas recently touted the “diversified assets” of EOG’s portfolio when discussing the company’s blockbuster first quarter, in which production rose 15% and profits surged more than 2,000% from a year earlier.
“Last year it was all about, ‘How much can you put in the Permian?’” said Daniel Romero, an analyst with the energy consulting firm Wood Mackenzie. “But now, a few months later, it’s what else are you doing outside of the Permian?”
After oil prices plunged in 2014, shale drillers flocked to the Permian because it was the least expensive place in the U.S. to produce oil by fracking, thanks to existing infrastructure and oil-bearing rock stacked like a layer cake, which allowed better yield per acre.