Oct. 17–ODESSA — Low temperatures and heavy mist that later turned into rain didn’t dampen the enthusiasm of those preparing to attend the Permian Basin International Oil Show.
But the weather conditions did shorten the opening ceremony, which celebrated this year’s honoree, Tim Leach of Concho Resources.
“(Energy) security is more important than ever,” Leach said. “The country is watching what the oil and gas industry is doing today.”
The show is a chance for the expected 40,000 visitors coming to the show over the next three days “to see all that we’re doing,” he said.
Drew Nixon, products manager, oilfield services, Drillinginfo, was making his first visit to the event and said he sees optimism among the service companies that dominate the show’s exhibitors.
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“Service companies are optimistic but cautious. They’re waiting to see if operators move assets elsewhere” because of the Permian’s pipeline constraints, he said.
If drilling and completion activity do slow down because of the pipeline bottlenecks, it’s expected to be temporary until new pipelines begin entering service late next year, he said.
While drilling rigs and completion crews remain strong, Nixon said their margins are lower. Still, there’s been no slowdown in activity, and there are reports of shortages of completion crews and the truck drivers needed to drive Permian Basin crude to market, he said.
That has put service companies in a quandary, according to Nixon.
“A lot of equipment is getting more wear and tear than normal because of activity levels. Service companies need to decide if they should repair or replace that equipment. You have smaller entrants in the market who have pushed prices down a little, so it’s hard to get a return on new equipment. You also have the challenge of finding people able to maintain the equipment,” he said.
Nixon said it’s good news that the differential between West Texas Intermediate Midland and WTI Cushing shrunk recently, falling from about $15 a barrel to about $7 a barrel.
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