U.S oil operators are drilling shale wells faster than fracking them following “record” 2023 production, EIA reports

David Wethe and Devika Krishna Kumar, Bloomberg April 15, 2024

(Bloomberg) – Shale operators are drilling wells faster than they’re fracking them.

Oil companies added to the number of drilled-but-uncompleted wells, known as the fracklog, last month for the first time in more than a year, according to a report from the US Energy Information Administration on Monday. The tally is a key indicator of near-term crude flows from U.S. shale fields because fracking is one of the final steps in the process of bringing new wells online.

Any slowdown in the U.S. production growth would be a key consideration for OPEC and its allies when they gather in June to decide whether to allow supply curbs to lapse. International crude prices have surged almost 20% this year amid concerns about the potential for global supply shocks, and analysts from JPMorgan Chase & Co. and elsewhere are warning oil may be headed for the $100 mark.

Stockpiling unfracked wells allows drillers to time production for periods of higher prices or easier access to pipelines and other infrastructure. As of the end of March, the fracklog rose by nine to 4,522, according to the government’s assessment of the seven most-important US shale regions.

Overall, U.S. shale-oil production is expected to be steady at about 9.86 MMbpd in May, below the record 10 MMbpd seen in December, according to the report. Production from the Permian basin hasn’t completely returned to the December high and is expected to be roughly 6.17 MMbpd next month.

The data will reassure oil bulls who’ve been watching U.S. production closely after efficiency gains helped propel a surprise production boom in 2023. While the number of U.S. rigs drilling for crude has largely remained flat this year, explorers had been eroding the fracklog every month since March 2023, contributing to the unexpected jump in output.

Lead image: Pumpjacks in Midland, Texas. (Photographer: Jordan Vonderhaar/Bloomberg)

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