Category Archives: Energy Outlook

Wells drilled but not completed fall below 8,000

The number of wells drilled but not completed (DUCs) fell to 7,950 in August 2019, the lowest level since November 2018. This is according to the latest Drilling Productivity Report from the Energy Information Administration (EIA). The report covers key onshore unconventional (shale) plays.

The number of DUCs has fallen by almost 300 since April 2019. In addition, the monthly 2019 numbers were also revised down by about 30-40 DUC’s from the numbers reported previously.

Completions were 1,389 in August 2019, a slight reduction from last month.

Interestingly Spears & Associates recently published a podcast ‘Mythical Beasts’ that cast doubt on the number of wells drilled but not completed. They point out flaws in the EIA methodology and have estimated that the number of DUCs is overstated by about 3,000. They conclude that there isn’t really a backlog of wells being held back by the E&P companies.

The EIA is projecting production of 8,768,000 barrels per day (bpd) for September. That’s up 87,000 on August’s number. For October, the projection is 8,842,000, up 74,000 bpd on September.

The September 2019 projection is 919,000 bpd higher than September 2018. That’s the first time in two years that the year-on-year increase is below 1 million bpd.

Onshore US production revised upwards while DUCs fall

The number of wells drilled but not completed (DUCs) fell for the fifth month running. At the end of July, the total number of DUCS was 8,108, down 100 on the revised prior month. This is according to the latest Drilling Productivity Report from the Energy Information Administration (EIA). The report covers key onshore unconventional (shale) plays.



The DUCs for previous months going back to December were revised downwards by about 30 a month.

The peak number of DUCs, which occurred in February, has been revised down by a further 27 from last month (from 8,416 originally reported to 8,313 last month to 8,286 now).

Completions rose by 19 to 1,411.

The EIA is projecting production of 8,683,000 barrels per day (bpd) for August. That’s up 63,000 on July. For September, the projection is 8,768,000.

This month, the EIA revised previously reported months upwards. March through June were adjusted by an average of 115,000 bpd. That reverses the trend of downward revisions in recent months.

https://www.eia.gov/petroleum/drilling/

Wells drilled but not completed continue to fall

The number of wells drilled but not completed (DUCs) fell for the fourth month running. At the end of June, the total number of DUCS was 8,248, down 41 on the (slightly restated) prior month. This is according to the latest Drilling Productivity Report from the Energy Information Administration (EIA). The report covers key onshore unconventional (shale) plays.



Interestingly, the peak number of DUCs, which occurred in February, has been revised down by over 100 from last month (from 8,416 to 8,313).

After falling last month, completions rose by four to 1,383, though last month’s number was revised down by 16.

The EIA is projecting production of 8,496,000 barrels per day (bpd) for July. That’s up 61,000 on June. For August, the projection is 8,546,000. Although production number for June is up 1.25 million bpd year-over-year, the growth is slowing down dramatically. In 2018, the average monthly growth over the previous month was 135,000 bpd.  So far this year it is 41,000 bpd.

While May & June reported production numbers are similar to the report last month, there were downward revisions for January (53,000), February (88,000) and March (72,000).

For context, overall US oil production was 12.2 million bpd in April 2019, the first time it has exceed 12 million bpd. This includes nearly 2 million barrels from the Federal waters of the Gulf of Mexico, as well as other conventional areas such as California (451k) and Alaska (475k). The Gulf of Mexico is up 400,000 bpd on April 2018.

https://www.eia.gov/petroleum/drilling/

 

 

Wells drilled but not completed approaching 9,000

Allan D. Hasty

The number of Wells drilled but not completed (DUCs) rose by more than 200 for the fourth month running. At the end of January, the total number of DUCs for the 7 major onshore producing areas in the lower 48 states was 8,798, up 207 on the prior month. This increase all occurred in the Permian Basin.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

The number of completions rebounded to 1,246, the highest since August 2018, as E&P companies started the year with replenished (if somewhat reduced) budgets.

The EIA is projecting production of 8,312,000 bpd for February, up 89,000 bpd on January. They are projecting 8,400,000 bpd for March, up 84,000 on the February projection.

Last month, after the big dip in completions in December, the EIA scaled back the growth in oil production for January and February. I speculated at the time that the EIA were being too pessimistic and so it has been proved. January’s production estimate is 57,000 bpd higher than previously forecast and February’s projection has been revised upwards by 133,000 bpd.

Many US land E&P companies have now announced 2019 capex plans with most stating that spending will be between 10% and 20% lower than 2018 levels. Despite that, most plan to increase year-on-year oil production by about 20%.

https://www.eia.gov/petroleum/drilling/

 

Permian wells drilled but not completed pass 4,000 for the first time

The number of wells drilled but not completed (DUCs) in the Permian Basin rose past 4,000 for the first time, according to the latest report from The Energy Information Authority (EIA).

At the end of November, the total for the 7 major onshore producing areas in the lower 48 states was 8,723. This was up 287 on the restated figure from the previous month. That’s six months in a row where the number has risen by at least 200.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

Completions were 1,307, up 9 on the restated figure from the prior month (but actually down 1 on the figure originally reported last month). This is the highest since March 2015. In the Permian Basin they rose by 3 but are still below the peak achieved in March 2018.

Production in the last couple of months has been 15,000-20,000 barrels per day (bpd) higher than the EIA originally estimated. The EIA is projecting increases of 123,000 bpd for December and 134,000 bpd for January.

In the Permian basin, oil production is estimated to hit 3.8 million bpd in January 2019.  Production from new wells is forecast to be 309,000 bpd, offset by a 236,000 bpd decline from legacy wells. This results in a net increase of 73,000 bpd. The January forecast is up 1 million bpd on January 2018.

The price of WTI has fallen dramatically recently. Factors include;

  • Increasing US production.
  • OPEC announced production cut is less impressive than it initially appears as it is based on October production, which had ramped up in recent months. Remember also that there is some seasonality in oil demand and the first quarter is always the low point.
  • Russia agreed to cut 400,000 bpd (Correction : Non-OPEC agreed to cut 400,000, Russia’s share was 228,000), but in recent days has said it will do this only slowly.
  • Increased investor concerns that demand growth is softening.
  • Hedge funds closing out their long positions.

In the past reduced production has occured 4-5 months after a major decline in WTI prices. Unless WTI rebounds soon, expect US oil production to stall at the beginning of the second quarter of 2019.

https://www.eia.gov/petroleum/drilling/

Wells drilled but not completed pass 8,500

The number of wells drilled but not completed (DUCs) rose past 8,500 for the first time, according to the latest report from The Energy Information Authority (EIA). That’s up 2,000 over October 2017.

At the end of October, the total for the 7 major onshore producing areas in the lower 48 states was 8,545. This was up 269 on the restated figure from the previous month. The average monthly increase in the past 6 months has been 226.  The DUCs in the Permian basin now stand at 3,866.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

The DUCs are expected to show large increases over the next few months. All the oilfield pressure pumping companies have warned of weak demand in Q4 as E&P companies suffer from budget exhaustion. Activity is not expected to significantly pick up until mid January.

Completions were 1,308, up 23 on the prior month. This is the highest since March 2015. In the Permian Basin they rose by 13 but are still below the peak achieved in March 2018.

Increases in production from these basins is projected to increase after slowing in October. Production rose by 99,000 barrels a day in October. The EIA is projecting increases of 105,000 barrels a day for November and 112,000 barrels for December.

https://www.eia.gov/petroleum/drilling/

Wells drilled not completed keep on rising

The number of wells drilled but not completed (DUC’s) rose for the 21st successive month, according to the latest report from The Energy Information Authority (EIA).

At the end of August, the total for the 7 major onshore producing areas in the lower 48 states was 8,269. This was up 238 on the restated figure from the previous month. The DUC’s in the Permian basin now stand at 3,630. This is up 211 on the previous month and up 80% year-on-year. DUC’s in the Eagle Ford are now 1,545 and have risen 25% year-on-year.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

Completions are still slowly rising and were 1,282 in August. Completions in the Permian Basin peaked in March 2018. The Anadarko Basin of Oklahoma shows the fastest rise in completions.

Increases in production from these basins is projected to slow. Production rose by 106,000 barrels a day in August with the EIA projecting increases of 93,000 barrels a day for September and 78,000 barrels for October.

https://www.eia.gov/petroleum/drilling/

Wells drilled but not completed climb over 8,000

The Energy Information Authority (EIA) released its latest Drilling Productivity Report that showed the number of wells drilled but not completed (DUC’s) rose for the 20th successive month.

At the end of July, the total for the 7 major onshore producing areas in the lower 48 states was 8,033, up 165 on the restated figure from the previous month. The DUC’s in the Permian basin now stand at 3,303, up 167 on the previous month and up 80% year-on-year. DUC’s in the Eagle Ford have now risen for 13 months in a row, the other basins have been flat or declining.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

Completions have stalled over the past 3 months at around 1,275 and show the lack of takeaway capacity from the Permian Basin is beginning to impact the numbers. Completions in the Permian have actually been flat for 5 months.

Increases in production from these basins is projected to slow. Production rose by 110,000 barrels a day in July  with the EIA projecting increases of 107,000 barrels a day for August and 93,000 barrels for September.

https://www.eia.gov/petroleum/drilling/

EIA reduces US oil production forecast for 2018 and 2019

The Energy Information Administration (EIA) published its monthly Short-Term Energy Outlook (STEO) and reduced the forecast US oil production for 2018 from 10.79 million barrels per day (mbpd) to 10.68 mbpd. For 2019, the EIA now expects production to be 11.7 mbpd, down 100,000 from last month’s forecast.

The reduction is a result of the lack of available pipeline takeaway capacity in the Permian Basin that is depressing wellhead prices in that region. This is causing E&P companies to slow down production in the basin.

For example, Cimarex Energy reported its Q2 results today. The company said that the realized Permian oil differential to WTI Cushing averaged $8.05 a barrel in the quarter, compared to $3.12 a barrel in Q1. Although oil production in the Permian Basin increased 13% from Q2 last year, it fell 2% from the first quarter.

The Q2 results and outlook for the independent E&P companies have been decidedly mixed. Some companies are reducing production targets. Others are maintaining production targets but require a higher capital spending to do so (due to wage increases, steel tariffs and oilfield cost increases).

Three other points of note in the report;

  • The EIA reduced the forecast world oil consumption slightly to 100.09 mbpd in 2018 and 101.66 mbpd in 2019. The 2018 figure is still 1.66 mbpd on the 2017 figure.
  • After declining by 0.9% in 2017, the EIA forecasts that energy-related carbon dioxide emissions will rise by 2.0% in 2018, due to higher natural gas consumption because of a colder winter and warmer summer than in 2017.
  • Pipeline exports of natural gas, which averaged 6.7 Billion cubic feet per day (Bcf/d) in 2017, will average 7.0 Bcf/d in 2018 and 8.5 Bcf/d in 2019. In June, two new pipelines in Mexico were placed into service that will import natural gas from the USA.

https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

Wells drilled but not completed rise sharply

Allan D. Hasty

The Energy Information Authority (EIA) released its latest Drilling Productivity Report that showed the number of wells drilled but not completed (DUC’s) rose for the 19th successive month.

At the end of June, the total for the 7 major onshore producing areas in the lower 48 states was 7,943, up 193 on the restated figure from the previous month. The DUC’s in the Permian basin now stand at 3,368, up 164 on the previous month. DUC’s in the Eagle Ford have now risen for 12 months in a row, the other basins have been flat or declining.

Interestingly in previous monthly reports of the EIA, it appeared that the rise in DUC’s was leveling off. The EIA has reduced previously reported totals by an average of 270 for each month in the past year, so the graph now shows that DUC’s are still rising at a solid pace.

Note that, every month, the EIA restate prior months’ figures, with revisions going back four years. 

Surprisingly completions actually fell by 1 to 1,243, though the Permian increased slightly. May’s overall completion figure was also revised down by 41 and, in fact, the EIA revised down each month since December 2017 by an average of 53 completions.

Production from these basins rose by 126,000 barrels a day in June, with the EIA projecting increases of 140,000 barrels a day for July and 143,000 barrels for August.

https://www.eia.gov/petroleum/drilling/