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US sharply raises shale oil drilling count but not output forecast

Published 05/17/2023, 04:48 PM
Updated 05/17/2023, 04:51 PM
© Reuters. FILE PHOTO: A pump jack is seen at sunset near Midland, Texas, U.S., on May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder
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By Stephanie Kelly

NEW YORK (Reuters) - U.S. oil producers were much more active last year in the prolific Permian Basin than the Energy Information Administration previously thought, the agency said on Wednesday, though its production forecasts for the region remain unchanged.

The EIA revised the number of drilled but uncompleted (DUC) wells in the top U.S. shale basin, adding several years' worth of unreported DUCs recently submitted to FracFocus, a data provider. It was another of several EIA data overhauls this year.

The revision does not affect the EIA's historical estimated crude oil production in the Permian because "operators had already submitted their crude oil production to states," the EIA said. It estimates Permian crude oil production in 2022 averaged 5.3 million barrels per day (bpd).

Oil market participants, including investors, traders and producers, pay close attention to weekly and monthly data releases from the EIA to make business decisions. Because DUCs can be quickly brought online to produce oil, the number is a benchmark for future production.

The EIA's updated count puts its Permian shale basin DUC well count at year-end 2022 at 1,069, up from 843 wells previously. As of April, the EIA estimates 910 DUC wells in the Permian.

The EIA also increased its estimate of 2022 well completions in the Permian to 5,704 wells from 5,328 wells completed.

© Reuters. FILE PHOTO: A pump jack is seen at sunset near Midland, Texas, U.S., on May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder

The revisions imply that drilling-rig productivity has been higher than past estimates, the EIA said. It believes active drilling rigs were about 10% more productive in 2021–2022 than previously estimated.

The revisions came after operators in mid-April submitted more than 1,100 Permian well completions during a single week to FracFocus, far higher than the usual 100 or so wells each week, the EIA said. FracFocus declined immediate comment. The bulk of those completions occurred in 2022.

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