WASHINGTON: US oil production growth this year is on course to be significantly lower than government forecasts, as companies struggle to find the operators and equipment they need to complete the wells they have drilled, according to a new energy research firm.
The steady rise in shale oil output from the US has weighed on global crude prices but the projections Kayrros, a Paris-based research firm backed by former Schlumberger chief executive Andrew Gould, suggest there may be less oil coming than expected coming on to world markets over the next few months. This would help support oil prices that have already risen about 10 per cent since the Brent benchmark dipped below $45 per barrel last month. The signs of capacity shortages are also good news for oilfield services companies such as Halliburton and Schlumberger, enabling them to raise rates after steep cuts during the industry downturn that began in 2014, but suggest the profitability of US oil and gas producers will remain under pressure. Once a shale well has been drilled it needs hydraulic fracturing or fracking and other procedures to start production. The number of drilled but uncompleted wells, often known as DUCs, in the US main shale oil and gas regions has been rising sharply this year, going from 4,944 last December to 6,031 in June, according to the US government’s Energy Information Administration.
Kayross argues that the number will continue to rise, slowing the growth of US oil output. By October, the firm sees onshore US production in the lower 48 states growing by 560,000 barrels per day from the end of last year to 7.09m, compared to the 900,000 b/d increase forecast by the EIA. Antoine Rostand, president of Kayrros, said: “The fracking industry is taking time to ramp up; there are not enough crews available to complete all the wells that have been drilled.”
