Amid the frenetic
activity of American shale oilfields recovering from a two-year
recession sit a handful of oil towns that seemed impervious as many
producers went into bankruptcy and the economy around them sank.
Occidental
Petroleum Corp and a few other oil producers with wells near this town
on New Mexico's border with Texas steadily pumped low-cost oil through
the downturn, using a technique that has been heralded worldwide as a
way to reduce carbon emissions and boost oil output.
"When everyone else in the oil industry was going down, Oxy kept working," said Joshua Grassham, vice president of Lea County State Bank and a Hobbs Chamber of Commerce board member. The city of 35,000 rests on the Permian oilfield, the largest oilfield in the United States.
This way of drilling brings with it a sweetener for the oil industry to keep crude flowing: a tax credit that helps insulate these wells in a downturn, and could triple in size if Congress approves a new measure this summer.
Such a move could extend by decades the producing life of hundreds more wells, increasing oil supply which would be a drag on prices. To date, the technique has been employed only at conventional oilfields, rather than on shale deposits. Some firms are studying how to put the technique to work in shale drilling, too.
The drilling method harnesses the carbon dioxide produced during the extraction of oil or from power plants, and forces it back into the fields. That boosts the pressure underground and drives more oil to the surface.
Their success could be replicated in oilfields across the United States if Congress approves the measure, which already enjoys broad bipartisan support. While the Trump administration has yet to say whether it supports the tax credit increase, the measure could also be a boon to the coal industry, which Trump wants to revitalize.
The technique, one of several so-called enhanced oil recovery (EOR) strategies used to prolong the productive lifespan of oilfields and increase output, underpins around five percent of U.S. oil output, or about 450,000 barrels per day, according to energy consultancy Advanced Resources International.
"When everyone else in the oil industry was going down, Oxy kept working," said Joshua Grassham, vice president of Lea County State Bank and a Hobbs Chamber of Commerce board member. The city of 35,000 rests on the Permian oilfield, the largest oilfield in the United States.
This way of drilling brings with it a sweetener for the oil industry to keep crude flowing: a tax credit that helps insulate these wells in a downturn, and could triple in size if Congress approves a new measure this summer.
Such a move could extend by decades the producing life of hundreds more wells, increasing oil supply which would be a drag on prices. To date, the technique has been employed only at conventional oilfields, rather than on shale deposits. Some firms are studying how to put the technique to work in shale drilling, too.
The drilling method harnesses the carbon dioxide produced during the extraction of oil or from power plants, and forces it back into the fields. That boosts the pressure underground and drives more oil to the surface.
Their success could be replicated in oilfields across the United States if Congress approves the measure, which already enjoys broad bipartisan support. While the Trump administration has yet to say whether it supports the tax credit increase, the measure could also be a boon to the coal industry, which Trump wants to revitalize.
The technique, one of several so-called enhanced oil recovery (EOR) strategies used to prolong the productive lifespan of oilfields and increase output, underpins around five percent of U.S. oil output, or about 450,000 barrels per day, according to energy consultancy Advanced Resources International.
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