Allen Gilmer, Co-Founder and Executive Chairman at DrillingInfo, Inc., is not a man who minces words, an attribute that has served him well during a long career in the oil and gas industry. When it comes to the Permian Basin and the amount of oil and gas resource contained in it, he becomes positively loquacious.
"We should view the Permian Basin as a permanent resource," he says, "The Permian is best viewed as a near infinite resource - we will never produce the last drop of economic oil from the Basin."
No one disputes that the resource in the Permian is huge, but 'infinite' is a big word. I asked him to expand on that concept. "That is the practical reality with the amount of resource that is in the ground," he says, "The research we've done indicates that we have at least half a trillion barrels in the Permian at reasonable economics, and it could be as high as 2 trillion barrels. That is, as a practical matter, an infinite amount of resource, and it is something that has huge geopolitical consequence for the United States, in a very good way. It has a huge consequence in terms of GDP, and right now it is creating an American energy global ascendancy."
Obviously, it is also a practical matter that the pace at which the industry produces the crude resource that underlies the Permian region in multiple formations will be constrained to some extent by commodity prices, costs, infrastructure and other potentially limiting factors. We have seen the Basin go into another boom over the last 12 months despite relatively low prices and, more recently, rapidly rising costs. Gilmer believes that infrastructure will be the most significant constraint going forward.