Chaos is an apt descriptor for 2020, especially for the last three months. In March, daily necessities like hand sanitizer became as precious as gold. For a few days in April, a bottle of beer cost more in a West Texas bar than a barrel of oil. May saw way too many in the oil and gas industry placed on an involuntary but necessary frac holiday.
When historians look back a decade from now, they’ll see that 339 rotary rigs were operating in the U.S. for the week of May 15, according to the Baker Hughes Rig Count, down from 987 one year ago. They’ll see a drop in the number of started frac operations from 1,238 in February to fewer than 330 for May, according to a Rystad Energy analysis. And if an IHS Markit analysis holds, then they’ll see that as much as 17 MMbbl/d of liquids production cut for the period from April to June 2020.
They also will see that global crude demand started to show signs of recovery in early May as parts of the world began to ease mobility restrictions going into the summer months. If a careful reintroduction continues, then they’ll potentially see that demand grow exponentially and see how quickly the oil and gas industry moved to fill that demand.
In preparing for that comeback, the U.S. shale producers have decades of experience and technologies ready to deploy. The last 10 years, in particular, are rich with numerous innovations in digital, electrical, hydraulic and mechanical systems that all contributed to substantially elevating production returns.