Mining powerhouse BHP Billiton (ASX: BHP) reportedly wants a share in what could be the world's second largest oil field, which lies in the South Midland section of the Permian Basin in Texas.
According to The Australian Financial Review, BHP is competing "vigorously" for a share in the 22,270,000 hectare multi-layered shale formation, where it is predicted that over 50 billion barrels of oil could be recoverable. Meanwhile, American listed explorer and producer Pioneer Natural Resources (NYSE: PXD) has estimated that the Spraberry and Wolfcamp ventures alone could account for those 50 billion barrels, further highlighting the area's potential.
BHP already holds around 178,000 hectares in the Permian – around half of which are located in the Delaware Basin – which came as a bonus with its Petrohawk acquisition for US$15 billion in 2011. Last year, the company predicted it could produce as many as 100,000 barrels per day, although it did not specify a time by which this would be achieved.
Hoxie Smith, the director of the Petroleum Professional Development Centre of Midland College, believes the company could find success in the Permian, stating "I think BHP was very smart to make the acquisitions in the areas they are in."
BHP isn't the only Australian company digging for riches in the US currently, with Aurora Oil & Gas (ASX: AUT), Sundance Energy Australia (ASX: SEA) and Red Fork Energy (ASX: RFE) also focused on producing oil and gas from US fields.
Foolish takeaway
It is expected that combined production from the Spraberry, Wolfcamp, Bakken and Eagle Ford fields could reach 15 million barrels of oil per day by 2017, which would see America almost overtake Saudi Arabia as the world's largest oil producer. Furthermore, it would slash US imports and significantly reduce reliance on Middle Eastern nations (where civil unrest creates extreme volatility in oil prices) and would even allow for substantial US exports.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
