Oil production from the Permian basin in West
Texas is once again on the rise. According to the
January Drilling Productivity Report published by
the US Energy Information Administration, production from the Permian is expected to increase
by 3,000 b/d from January through February. This
would bring production for the entire play to nearly
1.4 million b/d.
Since 1921, the Permian basin has produced a
cumulative 29 billion bbl of oil according to the
Texas Railroad Commission. Accumulative production from the Permian is impressive, but it has
been achieved through extreme cycles of boom
Boom cycles are influenced by new technology,
available infrastructure, and high demand. Innovation through new technology can improve production, but not all innovations become standard.
East of Monahans, Tex., the Million Barrel Museum encompasses a 14½-acre site where, in 1928,
Shell Oil Co. attempted to solve an infrastructure
problem. With a rapid rise in Permian production,
limited pipeline capacity for most of the play necessitated additional storage capacity. In January of
that year, construction began on a tank capable of
storing up to 1 million bbl of crude until it could be
shipped by rail or through the few pipelines from
Ward County to refineries on the Gulf Coast.
Once completed, the concrete-lined tank measured 20 ft deep, 620 ft long, and 510 ft wide with
a footprint of 8 acres. A wooden roof constructed
of 8-in. uprights and replete with an abundance of
lightning rods mitigated evaporation. Once filled,
the tank held 1.084 million bbl of oil. Within
days, the concrete proved to be a faulty barrier and
most of the tank’s contents had seeped through to
the ground. At a cost of $250,000, the tank was
abandoned. Adjusted for inflation, the same project today would have cost nearly $3.5 million.
The tank was refilled with water in 1956 and
christened “Melody Park.” The new recreational
lake opened and closed on the same day as, once
again, the contents seeped through the concrete
Today, the Million Barrel Museum is open to
the public and a portion of the tank’s liner has
been repurposed as an amphitheater that hosts local performances. While the facility is certainly a
marvel curiosity, from an industry standpoint it is
a monument to innovation that failed.
In 1926, the T.G. Hendrick No. 1 well struck oil
in Winkler County just north of Monahans. By
the end of 1927, Hendrick oil field was producing
50,000 b/d with no direct pipeline access. In his
book, The Permian Basin: Petroleum Empire of
the Southwest, author Samuel D. Myers says, “The
Hendrick field was the first in the Permian basin to
be drilled essentially with rotary equipment.” New
technology would make the Permian a frontrunner for oil production, and by 1938 the American
Petroleum Institute announced that the basin had
produced more than 1 billion bbl of oil.
Hendrick field production peaked in March
1929 when 577 wells produced 5,304,360 bbl of
oil in a 30-day period. By the end of 1931, the
field was in decline with only 11 million bbl of oil
produced in the previous year—which was down
further in 1945 at little more than 1.5 million bbl,
according to Myers.
Today, Hendrick field ranks among the Top
50 highest producing fields in the Permian, but is
dwarfed by giants such as the modern day Spra-berry trend.
As did rotary drilling equipment in the 1920s,
horizontal drilling and hydraulic fracturing have
dramatically enhanced reserves growth in several
North American plays. Improved infrastructure
and energy demand have all but eliminated the
need for storage capacity. And yet the question remains as to what elements of the current oil boom
from the Permian might make interesting museums in the future.