Looking forward, Permian production is sure to remain strong. At 235,000 MW added, natural gas, for instance, will easily remain our main source of new power generation capacity in the decades ahead.
And there are over $200 billion in new industrial plants along the Gulf Coast to utilize cheap shale gas to manufacture plastics.
Already the largest oil and gas producer, the U.S. could become the largest seller within five years.
The pipelines are coming to help companies swamped by low prices in the region.
There are at least 12 pipelines in Texas currently under construction, with almost 30 more in the pre-construction stages. Around 11,000 miles of pipe could be added.
The Permian will remain a key focal point for the ongoing hundreds of billions of dollars in new pipelines being built in North America, in conjunction with gas-based Appalachia and oil sands-based Alberta, Canada. In the U.S. alone, the midstream build-out could be as high as $362 billion by 2035.
Besides too low pricing, one emerging problem for Permian producers is an oil quality mismatch.
The Permian yields copious amounts of light or even ultra-light tight oil that is best-suited for making gasoline.
Yet, the global market is really short heavier oil used to make diesel fuel, with production and export issues in Mexico, Venezuela, Iran, and elsewhere.
Further, the U.S. refining system is mostly configured to process the heavier crude that has long been imported from Canada, Mexico, and Venezuela. So, along with very high but flat domestic demand, a good bit of our tight oil is forced to get exported as production continues to mount.
U.S. crude exports have averaged 2.7 million b/d this year, or nearly 40% higher than all of 2018.
The $57 billion fight between Oxy and Chevron to buy Anadarko is just one sign of the optimism surrounding the Permian.
And why not? Back in December: "America's Oil And Gas Reserves Double With Massive New Permian Discovery."
The rise of the supermajors in the Permian is a positive development for the U.S. oil and gas industry.
These giants have deeper pockets, and along with more consolidation, they can weather the storm during a down cycle, like Q4 2018 when oil prices plunged 40% to $45.
But oil prices regained that 40% in Q1 of this year.
And while always evolving efficiencies have given companies break-even prices of $40 or even below, some suspect that oil could be marching its way to $100.
By 2020, OPEC+ production cuts and a global reduction in the sulfur content of marine fuels could drive prices to levels they haven't seen since summer 2014.
This would obviously give U.S. producers huge incentive for more drilling, especially as logistical bottlenecks get straightened out.
Changes in production, however, usually lag changes in price by 6-9 months.
Overall, U.S. gas production will be enjoying non-stop growth, while crude output should be viewed as rising but eventually flattening out at some point.
This is not because of a difference in resource but because domestic oil use is flat and global demand growth is strong but not as strong as it is for gas (a favored fuel since it has lower GHG emissions and is key to backup intermittent wind and solar).