Shale Industry Set to Revive Dormant Wells
David Drake
Seasoned Business Development pro, helping companies in a variety of industries to effectively recover outstanding debt to improve cash flow and boost client relations.
by Collin Eaton, Houston Chronicle - Energy
Crude prices have climbed high enough that drillers could soon tap into the big backlog of dormant wells left behind in the darkest days of the energy bust, energy experts say.
The shale industry could bring some 800 dormant wells into production by year-end, producing enough crude to stabilize the nation's falling production, according to Norwegian consultancy Rystad Energy.
"We're seeing some companies are becoming more confident now that this is the real recovery," Artem Abramov, a senior analyst at Rystad Energy, said in an interview. "If they see prices at these levels for a few more weeks, they'll really accelerate."
Prices have hovered between $45 and $50 a barrel for several weeks. Crude climbed 98 cents on Thursday to settle at $50.11 in New York.
Twenty drilling rigs have already been hoisted back on U.S. oil fields, and the fleet will probably keep growing. But over the next six months, so-called completion activity could outpace drilling by 30 percent. Completion is industry shorthand for processes that get a well ready to pump oil, like pouring cement down a well's gullet.
Tapping into those 800 wells could boost U.S. crude production by as much as 350,000 barrels a day by year's end. Rystad said more than 90 percent of the backlog of 4,000 untapped wells would be profitable with crude prices around $50 a barrel.
Industry officials are increasingly optimistic that worst is over for the oil and gas industry. This week, both Khalid Al-Falih, the Saudi energy minister, and Bob Dudley, the chief executive of BP, said that after a long oil glut, supply and demand have come back into balance, aided by supply disruptions in Canada and Nigeria, and falling production in Venezuela, in the grip of an economic crisis.
The industry still has huge stockpiles to work through before it sees significant price increases. Inventories in the United States, about 530 million barrels, remain near record levels.