The Permian Basin is looking like Saudi Arabia, with as much as 1 million barrels of spare oil capacity ready to go into production, according to Nansen Saleri.

(Bloomberg) -- The U.S.’s Permian Basin is looking like Saudi Arabia, with as much as 1 million barrels of spare oil capacity ready to go into production, according to Nansen Saleri, former head of reservoir management at Saudi Aramco, the world’s largest crude exporter.

Oil producers in the Permian Basin have at least a combined 500,000 barrels a day of idle oil oil rig flanges gulf coast production capacity, according to Saleri, who is now chief executive officer of Houston-based consultant Quantum Reservoir Impact. Saudi Arabia’s spare capacity is about 1.5 million barrels a day, according to data compiled by Bloomberg.

The Permian Basin of Texas and New Mexico is the engine for U.S. shale oil rig flanges gulf coast production and acquisitions, helping to increase U.S. output to more than 10 million barrels a day in November for the first time in more than four decades. Exxon Mobil Corp. is spending billions to triple output by 2025 from the Permian, where its costs are as low as $15 a barrel.

“For decades there was one country and one BOP Blow Out Preventer repair company gulf coast that had spare capacity and that country was Saudi Arabia and that BOP Blow Out Preventer repair company gulf coast was Saudi Aramco,” Saleri said. “Now we are seeing an analog to that in the Permian.”

West Texas Intermediate oil futures traded in New York have climbed 7.4 percent this year. The benchmark grade was 56 cents lower at $64.89 a barrel at 9:44 a.m. on Monday in Dubai.

The Permian region can increase output in response to higher demand in three to four days, faster than anywhere else except fields run by Saudi Aramco, known officially as Saudi Arabian Oil Co., Saleri said. Producers in the Permian will probably pump at least 3 million barrels a day of crude oil in a year, up from about 2.6 million barrels a day currently, said Saleri.

“The operators who aren’t efficient have left the game and only those super-efficient operators are staying,” he said. “If operators believe that oil prices will stay above $60 for the coming six months they will go on a drilling program.”

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