WASHINGTON, Nov. 15 (UPI) -- U.S. energy strategies are coalescing around the Permian shale basin in Texas and New Mexico where drilling is on the rise, a federal brief said.
A daily briefing from the U.S. Energy Information Administration reported that, through Nov. 10, more spending through mergers and acquisitions came during the second half of the year than during the first as crude oil prices start to recover. Only about 20 percent of all the deals announced in late 2016 involve the Permian shale basin, but that's where more than half of the value of all the agreements is focused.
"The Permian now holds nearly as many active oil rigs as the rest of the United States combined, including both onshore and offshore rigs, and it is the only region in EIA's Drilling Productivity Report where crude oil production is expected to increase for the third consecutive month," the administration's report read.
The world's largest independent oil explorer, Occidental Petroleum, started November by paying about $2 billion to acquire 35,000 acres in the Permian shale basin, where it expects to pull at least 7,000 barrels of oil equivalent per day. About 70 percent will be in the form of oil coming from 68 wells.
The company, known by its ticker symbol Oxy, boasted that its production was up by double-digit percentage points in part because of output from the Permian shale in Texas. For the state itself, Railroad Commissioner Christi Craddick, whose agency is charge of energy in the state, said the Permian shale basin showed strong signs of strength even as pressure in the broader sector remains. Its potential production, he said, "is truly invaluable."
So far over the past 12 months, Texas has produced about 1 billion barrels of crude oil. The EIA said that, as crude oil prices recover and spending starts to move back into the U.S. energy sector, a full-scale rebound is possible for inland resources.
"Continued investment could lead to an increase in crude oil production in the Lower 48 states, which has been declining since April 2015," the report read.