the oil industry will move from capital constrained to labor constrained market
Houston, TX (PRWEB) October 25, 2016
Operators show signs of optimism with the West Texas Intermediate (WTI) above $50 per barrel the last two weeks in October.
According to Energent Group's report, the drilled but uncompleted (DUC) well count is rising in the major oil shale plays with 1644 DUCs in the Permian Basin, 883 in Eagle Ford, 700 in Bakken, and 530 in the DJ-Niobrara. The DUC Analysis report illustrates the inventory of wells by basin and operator.
The US Land Rig count, published by Baker Hughes, increased for the 5th straight week. The Permian Basin added 11 rigs, gaining 5.5% and Eagle Ford put 2 more rigs to work, increasing by 6.5% last week. Haynesville added 1 rig, a 6.5% increase from the previous week. The Cana Woodford, Marcellus, Williston, and Utica were unchanged. DJ-Niobrara released 1 rig, a decline of 5.6%. 84% of rigs, 438, are drilling horizontal wells.
Yet, many of these horizontal wells will not be completed until operators work through the backlog of drilled but uncompleted (DUCs) wells.
With oil above $50 per bbl and natural gas near $3.00 mcf, the industry will move from capital constrained to labor constrained market. Over 350,000 people were laid off globally during the last two years, according to Graves & Co. report and many of those laid off service company workers left the industry entirely.
Drilling rig crews and hydraulic fracture crews require extensive training and screening before going back to work. One drilling rig may require 4 to 6 weeks to staff appropriately. A frac crew (or frac spread) may only require 2 to 4 weeks. As commodity prices recover, operators will need additional frac crews in each shale play to reduce the DUC backlog. Energent Group's frac crew forecast illustrates a rising DUC count until 2017 for the Permian Basin.
Analysts are bullish on oil and natural gas for 2017 since shale producers are able to drill and complete wells economically at lower prices. However, operators and service companies must address the labor constraints in the market in order to bring back crews for the long term.
About Energent Group
Energent Group is a market research firm focused on well life-cycle & frac market intelligence. We help sales & marketing teams commercialize new products, work with up-to-date operator data, & track well completions in top U.S. shale plays: Texas (Eagle Ford, Permian, Wolfcamp, Bone Spring), North Dakota (Bakken), Colorado (Niobrara), Oklahoma (Woodford, SCOOP) and more. Our clients rely on Basin Pad Trends, Proppant Insights, Well Completion Activity, DUC Analysis, and Frac Crew Forecasts. Visit our complimentary US Land Rig Report.