Thursday, October 6, 2016
Starting in September, the Energy Information Administration’s (EIA) Drilling Productivity Report (DPR) began including estimates of the number of drilled but uncompleted wells (DUCs) in the seven DPR regions. Estimates will go through the prior month. The September DPR includes estimates through August.
Current EIA estimates show DUC counts as of the end of August totaling 4117 in the four oil-dominant regions—Bakken, Eagle Ford, Niobrara, and Permian—and 914 in the three natural gas-dominant regions—Haynesville, Marcellus, and Utica—that together account for nearly all U.S. tight oil and shale gas production. In the oil regions, the estimated DUC count increased during 2014 and 2015, but the count declined by about 400 over the past five months. The DUC count in the gas regions has generally declined since December 2013.
DUCs are wells that have been drilled by producers but have not yet been made ready for production. The full completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures to make the well ready to begin producing oil or natural gas. Following the large decline in oil prices since mid-2014, new drilling and completion activity slowed and the number of DUCs in oil-dominant regions increased. The high inventory of DUCs has implications for the size and timing of the domestic supply response to changes in oil prices, with or without significant changes in the number of active drilling rigs.
Although both drilling and completion activity have declined since late 2014, the completions have experienced a deeper decline than drilling in oil-dominant regions. The differences in drilling and completion rates in these oil regions may be attributed to several factors. For instance, some long-term contracts for drilling rigs and lease contracts may mandate drilling or producing in order to fulfill commitments made to the landowners and mineral-right owners.
Estimates of the number of DUCs from other sources often vary significantly because of differences in methodology and operational assumptions or, in some cases, insufficient data. EIA develops its estimates of DUCs for all seven regions in the Drilling Productivity Report using a consistent methodology and uniform assumptions.
Current EIA estimates show DUC counts as of the end of August totaling 4117 in the four oil-dominant regions—Bakken, Eagle Ford, Niobrara, and Permian—and 914 in the three natural gas-dominant regions—Haynesville, Marcellus, and Utica—that together account for nearly all U.S. tight oil and shale gas production. In the oil regions, the estimated DUC count increased during 2014 and 2015, but the count declined by about 400 over the past five months. The DUC count in the gas regions has generally declined since December 2013.
DUCs are wells that have been drilled by producers but have not yet been made ready for production. The full completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures to make the well ready to begin producing oil or natural gas. Following the large decline in oil prices since mid-2014, new drilling and completion activity slowed and the number of DUCs in oil-dominant regions increased. The high inventory of DUCs has implications for the size and timing of the domestic supply response to changes in oil prices, with or without significant changes in the number of active drilling rigs.
Although both drilling and completion activity have declined since late 2014, the completions have experienced a deeper decline than drilling in oil-dominant regions. The differences in drilling and completion rates in these oil regions may be attributed to several factors. For instance, some long-term contracts for drilling rigs and lease contracts may mandate drilling or producing in order to fulfill commitments made to the landowners and mineral-right owners.
Estimates of the number of DUCs from other sources often vary significantly because of differences in methodology and operational assumptions or, in some cases, insufficient data. EIA develops its estimates of DUCs for all seven regions in the Drilling Productivity Report using a consistent methodology and uniform assumptions.
