Catching Up On Old News -- DUCs -- March 14, 2020

I thought I had posted this note when it first came out, but a quick search of the blog and I couldn't find it. I would have posted it when we had that discussion about the number of DUCs in the US shale sector.

From S&P Global Platts, September 27, 2019: US producers criticize  EIA estimates clouding production outlook.

US producers may be growing increasingly skeptical of the US Energy Information Administration's estimates of drilled but uncompleted wells in shale plays, an indication that domestic output may not be able to respond to a price spike or supply disruption as rapidly as forecasts may indicate.

In its latest quarterly energy survey, the Federal Reserve of Dallas said roughly half of the oil and gas executives polled claimed EIA's was overestimating the number of drilled but uncompleted wells, or DUCs, in the Permian Basin. Roughly a quarter of those executives said EIA's Permian DUCs estimates were significantly higher than their own.

"My sense is the EIA DUC number implies more production capacity than actually exists and leads to downward revisions of supply estimates, which we have seen in the last six months," one executive from an exploration and production company wrote.

"The EIA has no clue on their estimated number of DUCs, in my opinion," wrote another, claiming that a loose definition of DUC is causing EIA to count smaller "spudder" wells and overestimate DUCs by thousands.

The survey, conducted earlier this month and released Wednesday, polled 164 energy companies, including 108 exploration and production firms, and 55 oilfield services firms.

"Not surprisingly, the majority of survey respondents believe the EIA is overestimating the number of DUCs," Sasha Sanwai, an analyst with UBS, wrote in a report Wednesday.

"Common pushbacks including the lag with reporting completions/underreporting and inclusion of spudder wells/legacy wells unlikely to be completed."

Re-posting the lede: 

" ... an indication that domestic output may not be able to respond to a price spike or supply disruption as rapidly as forecasts may indicate."

Well, so much for that concern. LOL.

Bakken DUCs are tracked here.

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European Majors Reduce Refining Footprints

They see the writing on the wall:

• the US juggernaut; and, 
• Saudi Aramco, Prince Salman's 2020 plan

From S&P Global Platts: Shell explores sale of two US refineries --

• Washington state: Anacortes
• Alabama: Mobile
• Both facilities are modest in size:
• Mobile: 79,000 b/d; oriented toward chemicals;
• Puget Sount: 145,000 b/d; selling this one would limie Shell's US refining presence to the Gulf coast;
• the more complex plant
• capable of making the low sulfur transportation fuels required by the region
• West Coast refiners are economic; holding above $10/bbl