From hellenicshippingnews, four hours ago:
U.S. oil production has fallen more than 2 million barrels per day since March 2020. Many reasonably expect that DUCs (drilled uncompleted wells) provide a solution to output falling further.
They won’t.
There are about 5,800 DUCs in the main U.S. tight oil plays. These are already drilled and could be converted into producing wells for the cost of completion which is about half the total well cost.
Most DUCs, however, are uncompleted for a reason namely, that their owners don’t believe that their performance will be as good as wells that they chose to complete instead.
Even assuming similar performance, the larger problem is that large numbers of DUCs are already being completed and official EIA 914 production remains less than 10.5 mmb/d.
North Dakota publishes monthly data on DUCs that can be compared with active, producing wells.
See linked article for more and for graphics.
With regard to the article: if only it were that simple.
Tag: Director's Cut. North Dakota production --
- March, 2020: 1,428,273 bopd; DUCs: 975; rig count: 52 rigs;
- November 2021: 1,224,540 bopd (preliminary); DUCs: 710; 11 rigs;
Note: Friday, May 15, 2020, the number of active rigs in North Dakota: 12.
Delta:
- November, 2021 / March, 2020, crude oil production: down 14%
- November, 2021 / March, 2020, active rigs: down 80%
- November, 2021 / March, 2020, DUCs: down 27%;
And after all that, I don't think it's a matter of "DUCs" saving the shale industry. As Art Berman himself said, the industry is made of myriad details: DUCs are just one component, albeit a huge component. I suppose it's like grain in silos. That grain may or may not save a farmer from bankruptcy -- too many other factors to consider -- but that grain in the silo does provide some life support. All things being equal, a farmer would appreciate grain in a silo rather than no grain in the silo.
Grain in the silo... The notion has long intrigued me. Farmers are, in my opinion,some of the world's best risk-takers. Betting on the weather, world-wide prices,chemicals, "critters" and on and on. Then, with a harvest in the silo, they become "commodity speculators" betting that a delivery at a future date is better than the bird in the hand. These folk are not really conservatives, they are truly gutsy!
ReplyDeleteWow, you nailed it. My hunch is that farmers were among the first who really, really appreciated the internet. All the information they did not have before at their fingertips and ability to quickly touch base with fellow farmers and brokers.
DeleteBerman is incapable of basic analysis. The EIA reports show that production was low in OCT because of GOM. EIA has onshore flat. The "recovery" is just GOM reverting to normal. Nothing to do with DUCs.
ReplyDeleteHe really is a flake. Remember when he said the Bakken decline was irreversible in JAN16? It went on to add 0.5 MM bopd after that. (He's never addressed this screwup.)
I really appreciate your support, because at the end of the day, I have no formal training or experience in the oil business. I am probably the last one to criticize anyone regarding analysis in the oil sector, but in this case it was pretty funny .... as I'm re-reading it, something didn't ring true. And then, of all things, it turned out be Art Berman. LOL. And my analysis is probably suspect, also, but at least I can say I'm inappropriately exuberant about the Bakken ... although that doesn't absolve me of all my inaccuracies ... but again, thank you for your support. Much appreciated.
DeleteOp-Ed Or Fact? could be either or neither. completions will depend on the price they can realize...he says we need 400 wells per month to maintain production...there's about 7,400 DUCs, with at least 6,400 of those in oil plays...so based on his number, production can be maintained for 16 months without even drilling another well...but if the price of oil is high enough, they'll budget more drilling in the 2nd quarter...on the other hand, if oil prices fall, even the completions don't get done..
ReplyDeletebtw, the December DUC report will be out later today...
Thank you, much appreciated. It will be another fascinating year.
Deleteso today's report indicated DUCs were down by 145 to 7,298....902 of those were in Appalachia or the Haynesville, so most of the rest were oil wells...
Deletebut here's the kicker: there were 518 completions in December; 118 gas and 400 oil...so that article's benchmark to hold oil production steady is already being met...
so Op-Ed Or Fact is already a moot question...