Explainer: What Is the Permian Basin?
ARTICLE
Why the Permian Basin—an energy-rich geological formation—is so important to the U.S.
Article by Steven Thomas, Monday 02 June, 2025The Permian Basin is one of the world’s most energy-rich geological formations, spanning West Texas and southeastern New Mexico. This vast shale basin produces nearly 40% of the United States’ oil and about 15% of its natural gas, making it a cornerstone of the country’s energy supply.
Covering roughly 250 miles wide and 300 miles long—larger than the entire state of Florida—the basin’s unique stacked layers of rock enable wells to tap multiple productive zones at once, maximizing resource extraction.
Why the Permian Basin Is So Productive
The basin’s geology allows a single well to access several layers of oil and gas trapped in different rock formations, making it one of the most prolific oil fields globally. The region is also the second-largest shale gas producer in the U.S., with natural gas production reaching record levels recently.
Technology Driving Growth and Efficiency
Advances in hydraulic fracturing and horizontal drilling have fueled rapid growth in the Permian Basin. Since 2010, horizontal wells have surged from a few hundred to thousands, boosting production capacity significantly.
Operators are now leveraging advanced technologies like predictive analytics and artificial intelligence (AI) to guide exploration, optimize drilling, and improve well performance, enhancing both productivity and safety.
How AI Is Changing the Business of Extraction
Barron’s reporter Avi Salzman recently toured Permian operations and reported on how AI is revolutionizing oil and gas production. AI systems analyze vast amounts of data from the field to identify opportunities, reduce downtime, and improve operational decisions.
Key takeaways include:
Steady Growth: Since 2012, oil production in the Permian Basin has increased from about 1 million barrels of oil equivalent per day (MMboe/d) to over 6 MMboe/d.
AI in Action: AI technologies help extract more oil and gas with fewer resources, driving productivity and shortening drilling cycle times.
Capital Discipline: Optimizing drilling and completion processes is crucial in a market sensitive to commodity price fluctuations.
Environmental Impact: AI is contributing to a reduction in methane emissions intensity by enabling better monitoring and control of operations.
Innovations Enhancing Operations
Sensors and Real-Time Data: Fields are outfitted with sensors that provide continuous data on pressure, temperature, and other critical factors.
Remote Operations: Technicians monitor and control equipment from remote locations, improving safety and operational efficiency.
Enhanced Oil Recovery: Artificial lift technologies, supported by AI, increase production from existing wells.
Autonomous Adjustments: Software systems automatically regulate valves and detect leaks, reducing the need for manual intervention.
Optimized Drilling: AI-driven insights improve bottom hole assembly reliability and enable continuous operational improvements.
“AI is revolutionizing the way we work by providing unprecedented access to data and insights, enabling better, faster decisions and unlocking value in daily operations,” said an industry technology leader.
Why This Matters
As global energy demand grows—especially in developing economies—the Permian Basin’s ability to provide reliable, affordable, and increasingly cleaner energy positions it as a critical resource for the future.
