The Permian Basin is a large sedimentary rock formation spanning about 86,000 square miles across western Texas and southeastern New Mexico. It gets its name from the Permian geological period (roughly 299 to 252 million years ago), when thick layers of marine sediment accumulated in an ancient sea that once covered the region. Today, the term is almost always used in the context of oil and gas production: the Permian Basin accounts for nearly 40 percent of all oil produced in the United States.
Why It’s Called “Permian”
Geologists name sedimentary basins after the dominant rock layers found within them. In this case, the thickest and most economically important deposits date to the Permian period, a stretch of Earth’s history when the region sat beneath a shallow tropical sea. Over millions of years, the remains of marine organisms, along with sand and mud, piled up in layers thousands of feet deep. When the sea eventually retreated, those organic-rich layers were buried, compressed, and slowly cooked by heat and pressure into the oil and natural gas reservoirs that drillers tap today.
The basin actually contains rocks from multiple geological periods, not just the Permian. Deeper layers from the earlier Pennsylvanian period are the second most oil-productive system in the region. But because the Permian-age rocks are the most prominent and productive, they gave the whole formation its name.
Where the Permian Basin Is
The basin stretches across 52 counties, covering a wide swath of sparsely populated land in West Texas and southeastern New Mexico. Major cities within or near the basin include Midland and Odessa in Texas, and Carlsbad and Hobbs in New Mexico. Despite the arid, flat landscape, the region is one of the most economically valuable pieces of ground in the Western Hemisphere.
Underground, the Permian Basin is not one uniform bowl. It’s made up of three distinct sections. The Delaware Basin sits on the western side and is the deepest, with the thickest rock deposits and a complex network of natural fractures. The Midland Basin occupies the eastern side and is shallower, less faulted, and somewhat simpler to drill. Separating these two is the Central Basin Platform, a raised subsurface ridge that runs through the heart of the formation. Each sub-basin has its own geology and presents different challenges for operators.
How Oil Was Discovered There
For most of its history, the land above the Permian Basin was considered nearly worthless, useful mainly for cattle grazing. That changed on May 28, 1923, when a well called Santa Rita No. 1 struck oil near the town of Big Lake, Texas. It was the basin’s first gusher, and it happened to sit on land owned by the University of Texas. The royalties that followed turned the university into one of the most heavily endowed schools in the world.
Other major fields were discovered in quick succession throughout the 1920s and 1930s, and the Permian Basin was soon recognized as one of the greatest oil regions on Earth. For decades, production came from conventional vertical wells drilled into porous rock where oil flowed relatively freely.
The Technology That Transformed Production
By the late 20th century, many of the basin’s conventional reservoirs were in decline, and some predicted the region’s best days were behind it. Hydraulic fracturing and horizontal drilling changed that completely.
Starting around 2010, operators began combining these two techniques to crack open tight shale rock that had previously been impossible to produce from economically. The results were dramatic. The number of new horizontal wells drilled in the basin jumped from 350 in 2010 to over 4,500 in 2021. The average horizontal length of those wells, a key factor in how much oil each one can reach, grew from less than 4,000 feet to more than 10,000 feet over the same period. Better geological mapping also helped companies place wells more precisely in the most productive zones.
The primary targets of this new era of drilling are formations called the Wolfcamp, Spraberry, and Bone Spring. These aren’t single layers but stacked sequences of oil-bearing rock, meaning companies can drill multiple wells at different depths from the same surface location. The USGS has described this “stacked play” potential as a major driver of continued development in the basin.
How Much Oil and Gas It Produces
The numbers are enormous. The U.S. Energy Information Administration forecast that crude oil production from the Permian would reach 6.3 million barrels per day in 2024 and 6.6 million barrels per day in 2025. Natural gas production was projected to average 25.8 billion cubic feet per day in 2025. If the Permian Basin were a country, it would rank among the top oil producers in the world, rivaling Iraq or Canada.
According to the Federal Reserve Bank of Dallas, the basin supplies nearly 40 percent of U.S. oil and about 15 percent of its natural gas. That concentration makes it uniquely important to both domestic energy supply and global oil markets. When Permian production rises or falls, it moves prices.
Environmental Costs
The rapid growth in production has come with significant environmental consequences, particularly methane emissions. A 2020 study published in Science Advances, using satellite measurements, estimated that the Permian Basin was leaking methane at a rate of about 3.7 percent of the total gas extracted. That’s roughly 60 percent higher than the national average for oil and gas operations. The rapidly developing Delaware sub-basin had an even higher leakage rate of 4.1 percent.
Much of this methane escapes through venting and flaring, where natural gas is either released directly into the atmosphere or burned off at the wellhead. Flaring in the basin increased fourfold between 2012 and the study period, largely because pipeline infrastructure couldn’t keep pace with the surge in drilling. Methane is a potent greenhouse gas, making these emissions a growing concern for regulators and climate scientists.
Water use is another pressure point. Hydraulic fracturing requires large volumes of water in a region that is naturally dry, and the process generates huge quantities of wastewater that must be disposed of, typically by injecting it deep underground.