Rigzone: Permian Fracking Activity Underreported in 2018 _ 2 key findings

[Tom Kirkman + 8,860]

I mentioned Rigzone up front in the thread title, because it is becoming increasingly difficult to find actual hard news (i.e. facts) in my normal daily news search for oil news.  The signal to noise ratio of hype to useful information about the oil industry seems to be getting noisier and more shrill.

I'm not really a fan of Rigzone, due to their lawyers forcibly shutting down and erasing from the internet their rival, the hugely successful Oilpro forum.  But at least some of their articles tend to be hard news rather than MSM clickbait hysteria.

Anyway, here's an excerpt from this article:

Permian Fracking Activity Underreported in 2018

Hydraulic fracturing (fracking) activity was underreported by 21 percent in the U.S.’ most prolific basin in 2018, according to Kayrros, a data analytics company serving the energy markets.

In findings released Tuesday, Kayrros claims that more than 1,100 wells were completed in the Permian Basin but not reported through state commissions or FracFocus – a public repository for information on chemicals used during fracking.

Kayrros said it uses optical and synthetic aperture radar imagery tracking along with proprietary algorithms to identify rigs and frack crews. Using those methods, they counted a total of 6,394 completed wells in the Permian in 2018 – a 21 percent increase from the FracFocus estimate of 5,272 wells as of June 20, 2019.

Impact to Shale Oil Economics     

The discrepancy in the reported wells means the industry has failed to capture the full scale of fracking, Kayrros contends. This implies two things:

• Oil inventory is smaller than believed – Kayrros estimates the Permian’s drilled but uncompleted (DUC) wells inventory is 1,000 wells each month with most of the rolling inventory coming from regular drilling and completions operations. Over time, the number of drilled wells matches completed wells, leaving DUC inventories unchanged. The belief that shale operators have a large backlog of DUCs that can quickly be brought to production in the event of an oil crisis without further drilling is misleading
• Transformation of perception of light tight oil economics – Based on Kayrros’ measurements, the average well is less productive and of higher cost than what is reflected in public data

“For all its revolutionary impact on the oil industry, shale remains poorly understood,” Kayrros chief analyst and cofounder Antoine Halff said in a release sent to Rigzone. “Publicly available data based on old-fashioned company reporting have their limits. Hard measurements unlocked by new data technologies show that contrary to public belief, there is no great buildup of DUCs just waiting to be brought online. The whole idea that the market can rely on this sort of de facto spare production capacity is an illusion. The industry is actually running on a much tighter leash than that.”

...

[Douglas Buckland + 6,308]

On 7/24/2019 at 6:47 AM, Tom Kirkman said:

I mentioned Rigzone up front in the thread title, because it is becoming increasingly difficult to find actual hard news (i.e. facts) in my normal daily news search for oil news.  The signal to noise ratio of hype to useful information about the oil industry seems to be getting noisier and more shrill.

I'm not really a fan of Rigzone, due to their lawyers forcibly shutting down and erasing from the internet their rival, the hugely successful Oilpro forum.  But at least some of their articles tend to be hard news rather than MSM clickbait hysteria.

Anyway, here's an excerpt from this article:

Permian Fracking Activity Underreported in 2018

Hydraulic fracturing (fracking) activity was underreported by 21 percent in the U.S.’ most prolific basin in 2018, according to Kayrros, a data analytics company serving the energy markets.

In findings released Tuesday, Kayrros claims that more than 1,100 wells were completed in the Permian Basin but not reported through state commissions or FracFocus – a public repository for information on chemicals used during fracking.

Kayrros said it uses optical and synthetic aperture radar imagery tracking along with proprietary algorithms to identify rigs and frack crews. Using those methods, they counted a total of 6,394 completed wells in the Permian in 2018 – a 21 percent increase from the FracFocus estimate of 5,272 wells as of June 20, 2019.

Impact to Shale Oil Economics     

The discrepancy in the reported wells means the industry has failed to capture the full scale of fracking, Kayrros contends. This implies two things:

• Oil inventory is smaller than believed – Kayrros estimates the Permian’s drilled but uncompleted (DUC) wells inventory is 1,000 wells each month with most of the rolling inventory coming from regular drilling and completions operations. Over time, the number of drilled wells matches completed wells, leaving DUC inventories unchanged. The belief that shale operators have a large backlog of DUCs that can quickly be brought to production in the event of an oil crisis without further drilling is misleading
• Transformation of perception of light tight oil economics – Based on Kayrros’ measurements, the average well is less productive and of higher cost than what is reflected in public data

“For all its revolutionary impact on the oil industry, shale remains poorly understood,” Kayrros chief analyst and cofounder Antoine Halff said in a release sent to Rigzone. “Publicly available data based on old-fashioned company reporting have their limits. Hard measurements unlocked by new data technologies show that contrary to public belief, there is no great buildup of DUCs just waiting to be brought online. The whole idea that the market can rely on this sort of de facto spare production capacity is an illusion. The industry is actually running on a much tighter leash than that.”

...

Very interesting read!

[wrs + 893]

For whatever reason, the oil wells that XTO drilled and completed in 2018 on my Reeves section are all showing up on the RRC map as shut-in producers which is the same as DUC.  I don't know why that is and they aren't reporting per well production, just at the lease level.  They drilled four more wells this spring and sent us division orders on them but we don't have division orders on all the ones they drilled last year.  They are getting ahead of their ability to keep up with the filings I guess or they get some benefit from the mis-characterization.