The Effect of Natural Gas on the Permian Basin: A New Look at the Well Economics and Production Outlook

Despite the increased attention to the energy transition and clean energy sources, the world continues consume growing volumes of fossil fuels as the alternative technologies development lags behind the economic growth. Moreover, the international fossil energy trade has become a channel for pressure in geopolitical conversations. Thus, restrictions on export and caps on the prices for fossil energy have been used by European and other countries to discipline Russia and stop the Ukrainian war. In this context, we turn our attention to the U.S. largest uncontentional oil play, Premian Basin, that supplies sizable volumes of both liquids and natural gas to the U.S. and global energy markets. The objective of our study is to investigate new economic (and operational activity) questions critical for the understanding of the future of the Permian basin and its role in the global energy markets and geopolitical discussions. To inform the debates of whether the recent oil and natural gas price spikes are sufficient to stimulate the short- to mid-term oil and natural gas drilling sufficient to (partly) substitute Russian exports.