Operators in U.S. shale plays are on track to drill and complete more than 20,000 wells this year, an 8% increase over 2018, according to a new report from Energent, Westwood Global Energy Group’s unconventional-focused research unit.
By the end of 2019, completions will start to outpace the drilling on a basin-by-basin level,” according to Energent. The futrure trend will also include efforts to whittle down the sector’s large inventory of DUCs: drilled but uncompleted wells.
If the projection holds, it would mark the highest number of wells drilled since 2014, when U.S. operators drilled almost 32,500 wells. It would also be the first time since the first half of 2016 shale producers completed more wells than they drilled, Kallanish Energy understands.
Energent expects the U.S. rig count to drop later this year as operators concentrate on reducing the number of DUCs, which should peak at roughly 10,300 wells in mid-year before falling to 4,600 in 2022.
Despite the turbulent price period between October and December of last year, prices have been relatively stable since then and may continue their modest rebound, according to Energent.
Energent’s scenario for 20,000 new wells relies on a base West Texas Intermediate oil price of $60 per barrel this year. If prices slip to $52/Bbl, drilling activity will likely be disrupted and could stall, the report states.
The projected growth in drilling activity is already taking place in the Eagle Ford Shale, the Williston Basin, and the Mid-Continent shale plays (i.e. the Scoop/Stack). Drilling in the Eagle Ford increased by 43% year-over-year in 2018, while the Williston and Mid-Continent saw upticks of 36% and 23% respectively.
Activity levels in the Permian Basin have been more balanced ever since production overtook takeaway capacity last year. “That issue will be mostly solved by late 2019,” said Jang, as new oil and gas pipelines come online with combined capacities of 1.4 million barrels per day (Mmbpd) and 4 billion cubic feet per day (Bcf/d), respectively.
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