News and Articles

Sharp Rise In Shale Oil Drilling Count, Output Forecast To Remain The Same

According to the EIA, oil producers in the U.S. in the prolific Permian Basin were more active than usual last year when compared to estimates by the Energy Information Administration. In spite of this, the region's production forecasts remained unaffected.

EIA adjusted its count for DUC wells (drilled but uncompleted) in the leading U.S. shale basin, counting unreported DUCs from many years ago. This data was given to FracFocus, (a data provider), and it was among the EIA's many data overhauls in the year.

Request Access For the Latest Price Trends of Crude Oil

However, these additions and calculations will not alter the historical crude oil production estimates given by the EIA since operators provided their production estimates to the states previously. As per this, the 2022 production estimates for Permian crude oil averaged 5.3 million barrels each day.

Players in the oil market, including traders, producers, and investors, are closely monitoring the data released (monthly and weekly) by EIA to form smart business decisions as DUCs are quickly purchased online to produce oil, the number is set as a benchmark for production in the future.

The final count by EIA in 2022-end for its Permian shale basin DUC well rose from the previous 843 wells to settling at 1,069. EIA estimates for April settle at 910 DUC wells in the Permian.

EIA raised its 2022 estimation for finished wells in the Permian from 5,328 wells to 5,704 wells. These updates mean that in comparison to previous estimations, drilling-rig productivity is reportedly higher by around 10% within the time span of 2021-2022 compares to previous estimations.

Read More About Crude Oil Production Cost Reports - Get Free Sample Copy in PDF

The corrections are a follow-up to the 1,100 + Permian well completions submitted by operators in mid-April to FracFocus in a week's time, much higher compared to the standard count of 100 wells per week. The majority of these completions took place in 2022.

According to the article by Procurement Resource, the U.S. shale oil drilling activities are on the rise compared to the previous estimates provided by the EIA; however, the prolific Permian Basin's previous output projections will likely remain unchanged.

The extra DUC wells count was provided to FracFocus by EIA, which was part of the many data overhauls the administration did this year. Many oil market players are closely monitoring these changes to make smart investment decisions in the future. Further details of the additions have been mentioned above.