Re-posting: a2019 Permian output surge may impact oil prices -- Rigzone contributor. See this note for more regarding this article, but note this -- DUCs in the Permian.
There are also constraints on how quickly production can increase. The large and growing number of unproductive wells (DUCs) in the Permian suggests that new pipeline capacity, allowing for higher wellhead prices, will see a surge in well fracking/completions, depending on the availability of crews.
Historically, the number of wells fracked in a given month in the Permian has been as high as 668 (October 2014) versus a recent level of 530, and the rate has increased as much as 20-30/month, sometimes much higher. It seems unlikely that the number of fracked wells can increase by more than 50/month, but since the typical well adds about 600-700 b/d of gross output, the implication is that Permian output could grow by an additional 30 tb/d per month, or 360 tb/d by December 2020 versus the year earlier amount. This amount is probably incremental to existing projections.This blows me away. Remember, the Permian is much, much bigger than the Bakken.
Some data points.
Sources:
- https://www.eia.gov/petroleum/drilling/pdf/permian.pdf
- North Dakota DUCs and inactive wells
- May, 2019, survey
- NDIC Director's Cut
- Permian: 500 (remember, the headline news today regarding rigs -- the number of oil rigs in the Permian dropped by four last week)
- North Dakota: 45 (Baker Huges); 65 (NDIC)
- Permian: 4.5 million bopd
- Bakken: 1.4 million bopd
- Permian: 4,000
- North Dakota: 1,000
- Note: these are DUCs only; does not include "inactive wells" for operational reasons
- North Dakota has another 1,500 inactive wells; most of operational reasons
- Permian: 600
- North Dakota: 100
i had a comment on that Rigzone article:
ReplyDeleter.j. sigmund | August 24, 2019
you are not going to get a 50 well a month completion increase rate; you can't train competent frack crews that quickly...
That was probably the same thought the "Rigzone" folks but if they put in too low a number, analysts would accuse "Rigzone" of low-balling their estimates. They probably knew an increase of 50/month was a stretch but at least they wouldn't be accused of low-balling their estimates. Fascinating catch on your part: I would not have caught it.
DeleteEven Lynn Helms seems to suggest that frack crew numbers is/are a huge limiting factor in the Bakken in his monthly Director's Cut.
there may be other limitations as well...i know nothing about the manufacturing of fracking equipment, but unless the factories are running well below capacity, there's probably not much slack to be made up on those, either, also limiting rapid increases...
ReplyDeleteThere's probably a junkyard of old frack equipment following the "bust" of 2016 when the Saudis tried to destroy the US shale industry, but that stuff would probably not be salvageable, three years later.
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