U.S. Oil, Natural Gas Output Rises with 10% Fewer Wells

While U.S. production of crude oil and natural gas was rising in 2018, the number of wells fell to 982,000, down from a peak of 1,035,000 in 2014, reports the Energy Information Administration (EIA). This production increase, despite the decline in well count, reflects advances in technology and drilling techniques. EIA’s updated U.S. Oil and Natural Gas Wells by Production Rate report shows how daily output rates of individual wells by state contributed to an increase in total crude oil and natural gas production in 2018.

Wells classified as non-horizontal in the report—most of which are vertical wells—have decreased 10% from 935,000 in 2014 to 842,000 in 2018. Horizontal wells are relatively less common, but they are growing as a share of the total. The 99,000 horizontal wells producing in 2014 accounted for 10% of the total. In 2018, 140,000 horizontal wells represented 14% of total producing wells.

Although drilling with horizontal wells is more expensive than vertical wells, they contact more reservoir rock and therefore produce greater volumes. Only 1% of vertical wells produced at least 100 bbld of crude oil in 2018, but 32% of horizontal wells produced at least 100 bbld, notes EIA. As horizontal wells became more common, production growth was sustained even as well count fell.

Even with fewer wells, U.S. oil production grew from 8.8 MMbbld in 2014 to 10.8 MMbbld in 2018. During the same period, U.S. natural gas production—gross withdrawals—increased from about 78.5 Bcfd to 94.8 Bcfd. Since 2019, crude oil and natural gas production has continued to advance. In November 2019, crude oil production had risen to about 12.9 MMbbld and natural gas output had jumped to 116.9 Bcfd.

In its report, EIA groups wells into 26 production volume brackets, ranging from less than one barrel of oil equivalent per day (BOED) to more than 12,000 BOED. Most U.S. oil and natural gas production comes from wells producing between 50 BOED and 1600 BOED. In 2018, wells within this range accounted for 9% of active wells that produced 66% of crude oil output and 62% of natural gas production.

(SOURCE: The Weekly Propane Newsletter, March 5, 2020. Subscribe for all the latest posted and spot prices from all major terminals and refineries around the U.S., market analysis and commentary delivered to inboxes weekly.)