In a surprising turn of events, the Energy Information Administration (EIA) has uncovered a hidden wave of activity in the Permian Basin that has significantly boosted oil production.
Unreported wells, previously unknown to the agency, have come to light, shedding new light on the true extent of drilling in this prolific shale basin.
The EIA made this discovery by revising the number of drilled but uncompleted (DUC) wells in the Permian Basin, incorporating data from recently submitted unreported DUCs obtained through the FracFocus data provider. This revelation marks one of several data overhauls undertaken by the EIA this year, showcasing the agency’s commitment to providing accurate and comprehensive information.
Importantly, the revision does not impact historical estimates of crude oil production in the Permian Basin. The EIA maintains its estimate that the region averaged 5.3 million barrels per day (bpd) of crude oil production in 2022. However, the unreported wells hold significant implications for the future production potential of the basin.
Oil market participants, including investors, traders, and producers, closely follow the EIA’s weekly and monthly data releases to inform their business decisions. The number of DUCs serves as a crucial benchmark for forecasting future production because these wells can be rapidly activated to begin producing oil.
With the updated count, the EIA now estimates that there were 1,069 DUC wells in the Permian Basin at the end of 2022, surpassing the previous count of 843 wells. As of April, the agency believes there are approximately 910 DUC wells in the region. This significant increase in the number of DUC wells indicates a higher level of drilling activity than previously thought.
Furthermore, the EIA has revised its estimate of well completions in the Permian Basin for 2022, increasing the count from 5,328 to 5,704 completed wells. These revisions suggest that drilling-rig productivity has been higher than initially estimated, indicating that active drilling rigs were around 10% more productive during the period of 2021-2022.
The discovery of the unreported wells was triggered by an unusually high submission of over 1,100 well completions to FracFocus in mid-April. This number far exceeded the typical weekly average of around 100 wells. While FracFocus declined immediate comment on the matter, it is evident that the bulk of these completions occurred in 2022.
The revelation of the hidden activity in the Permian Basin underscores the need for accurate and up-to-date data in the energy sector. As oil market participants digest this new information, the focus now turns to the potential impact of these unreported wells on the future production landscape of one of America’s most vital oil-producing regions.
