Oil and natural gas are old energy — as old as it gets. But increasingly, the technology used to extract them is cutting-edge. “Over the last 20 or 30 years, there’s been more technological leaps out of the oil and gas industry than there’s been out of Silicon Valley,” says Dale Nijoka, Ernst & Young’s global oil and gas leader.
Nowhere is that more obvious than in West Texas, where energy companies are using hydraulic fracturing and horizontal drilling on the hydrocarbon-rich shale rocks found in the surrounding Permian Basin. For all the attention paid to the Bakken in North Dakota and the rising Eagle Ford in South Texas, it’s the reliable Permian — which has already produced 29 billion barrels of oil — that has the most room to grow. “There’s more drilling activity going on in the Permian Basin today than ever before,” says Mitch Mamoulides, Midland-Delaware basin manager for Chevron North America.
Environmental concerns about fracking and water use could slow the pace of development, but analysts believe the technology could help the Permian Basin produce more than 2 million barrels of oil a day in the next four years, which would be a historic high. Some of that is geology: the bulk of the Permian’s hydrocarbons are oil, as opposed to less valued natural gas. But expertise and infrastructure play a role too. There have been commercial oil wells in the Permian since 1921, and Midland, Texas, may have more expert drillers per capita than any other city on earth. All of which means that this is a boom that could last.
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