Permian Basin

The Permian Basin is a sedimentary basin beneath West Texas and the adjoining part of southeastern New Mexico, covering an area about 250 miles wide and 300 miles long.¹ Oil was first produced there commercially in 1921, and in the years after the Second World War it became the leading oil producing area in the United States.¹² In 2025 the Permian region accounted for 48 percent of the country’s crude oil production.³

Geology

The basin takes its name from the Permian period. The area subsided before the Permian sea covered it and kept sinking through much of that period, so that it holds one of the thickest deposits of Permian rock anywhere.¹ George G. and Benjamin F. Shumard first reported rocks of Permian age in the region in 1858, after studying outcrops in the Guadalupe Mountains.¹ As the sea retreated it left an inland body of water in which evaporation exceeded inflow, laying down thick evaporite beds that include potash, first mined commercially in New Mexico in 1925.¹

Although a basin beneath the surface, much of it lies under topographically high ground, the Llano Estacado and the northwestern Edwards Plateau.¹ In 1930 the geologist Lon D. Cartwright mapped a raised block near its middle, which he named the Central Basin Platform.¹ The greater basin also takes in two large sub basins, the Midland Basin and the Delaware Basin.⁴ The Railroad Commission of Texas counts more than 7,000 fields in the Texas part of the basin, producing from formations such as the Yates, San Andres, Spraberry, Wolfcamp and Bone Spring at depths from a few hundred feet to five miles.⁴

Early development

Ranchers drilling for water often found traces of oil or gas.¹ The first commercial oil well in the basin was completed in Mitchell County in 1921 as the discovery well of the Westbrook field.¹ On May 28, 1923, the Santa Rita No. 1, drilled on University of Texas land in Reagan County, came in after 646 days of cable tool drilling and proved that the region held oil; royalties from those lands were later shared by the University of Texas and Texas A&M.⁵ Discoveries at McCamey in 1925, Yates in 1926 and Hobbs, in New Mexico, in 1928 followed, the last located with magnetometer and torsion balance surveys.¹ That same year a deep test at Big Lake found oil at 8,525 feet in rocks of Ordovician age.¹

Distance from markets and a shortage of pipelines slowed the region.¹² Producers in the Yates and Hendrick fields agreed to limit output under the supervision of the Railroad Commission of Texas, and the flood of oil from the East Texas oil field after 1930 depressed West Texas exploration until the middle of the decade.²

Growth

The demand for oil during the Second World War justified deeper and more expensive tests, and new zones were found in every geologic system from the Permian down to the Cambrian.¹ Among the largest accumulations were the Horseshoe Atoll, a buried limestone mass about ninety miles across, and the Spraberry trend, a fractured reservoir about 150 miles long.¹ Between 1946 and 1951 the number of oil companies doing business in Midland rose from 135 to 363.² In 1953 the commission shut down all 2,268 producing wells in the Spraberry trend to stop the flaring of natural gas.²

Midland became the financial and administrative center of the basin and Odessa a center of processing, including a petrochemical complex that began operating in 1957 and 1958.⁶⁷ Both cities rose and fell with the price of oil.⁶⁷ The boom of the late 1970s ended in 1982, and three Midland banks failed in 1983, among them the First National Bank of Midland, the largest independent bank in Texas.⁶²

Present day

The Permian underlies 66 counties in Texas and New Mexico.⁸ Between 2020 and 2024, ten of those counties accounted for 93 percent of the growth in United States crude oil production, largely from the Bone Spring, Spraberry and Wolfcamp formations.⁸ In 2025 its output rose by 280,000 barrels a day to 6.6 million barrels a day, supplying most of that year’s national growth.³ The Commission reports the Texas portion of the basin through its oil and gas districts 7C, 08 and 8A.⁴

The contractors who drill, complete and supply its wells are described in the entry on oilfield services. How the weather and the budget calendars of operators in basins such as this one bear on the finances of those companies is taken up in an essay on seasonal cash. Other entries are gathered in the reference index.

References

1. Texas State Historical Association, Handbook of Texas, Permian Basin ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹ ↩¹² ↩¹³ ↩¹⁴

2. Texas State Historical Association, Handbook of Texas, Oil and Gas Industry ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

3. U.S. Energy Information Administration, Today in Energy, U.S. crude oil production rose in 2025, setting new record ↩ ↩²

4. Railroad Commission of Texas, Permian Basin Information ↩ ↩² ↩³

5. Texas State Historical Association, Handbook of Texas, Santa Rita Oil Well ↩

6. Texas State Historical Association, Handbook of Texas, Midland, TX ↩ ↩² ↩³

7. Texas State Historical Association, Handbook of Texas, Odessa, TX ↩ ↩²

8. U.S. Energy Information Administration, Today in Energy, Ten counties in the Permian Basin account for 93% of U.S. oil production growth since 2020 ↩ ↩²