We're going to talk about E&P trends in 2019. A lot to discuss here. Let's start with the shale efficiency gains. What did you see there?
That has been a continued trend we have seen from oil and gas companies in shale plays. They've been doing a lot in the area of improving efficiency, especially in drilling and completions. So, oil and gas companies working with oilfield service companies, they've been reducing the number of days it takes to drill a well. They've been using more zipper fracs and they've been cutting down on non-productive time.
What does that mean for oil and gas companies that have been struggling to grow profits?
It means they are cutting their well costs and that is a good thing. It also means they are using [fewer] rigs. They are able to drill more wells with fewer rigs and that cuts down on cost and they're also able to produce more oil and gas should they choose to do so. Analysts at Rystad Energy recently discussed some of the D&C trends that we've been seeing particularly in shale plays like the Permian Basin and Eagle Ford and Marcellus. They noted some areas where oil and gas companies have been doing a pretty good job at improving some of these efficiencies. If we want to look at some of those that Rystad pointed out. There was a 22% improvement in the number of drilling days per 1000 feet in the Permian's Midland sub-basin and there was also a 22% improvement in the Marcellus as well. As far as zipper frac penetrations there was a 31% improvement seen in the Permian's Delaware sub-basin.
Let's talk about attention on ESG.
There's been more focus on environmental, social and governance and more sustainable business practices and this has put the spotlight more on flaring particularly in the Permian Basin. It's been a big problem there. Again, analysts at Rystad studied this and found that in a third-quarter flaring and venting of natural gas actually reached a new all-time high for the Permian Basin. It jumped to an average of more than 750 million cubic feet per day in the third quarter.
What has been happening offshore?
The offshore sector continues to rebound and oil and gas companies have been bringing down their breakevens and a key to their success has been utilizing existing infrastructure and subsea tiebacks, which makes their offshore projects more economic. Companies have also been carrying out infrastructure-led exploration programs. That's essentially exploring near where they've already found oil and gas and using seismic data. Hess Corp., for example, made a discovery with [its] Esox-1 well in the U.S. GoM earlier this year. That's located near the Tubular Bells facility.
Velda, what about production? How is that going?
Production in the Gulf of Mexico is increasing too and that's also good news. The U.S. Energy Information Administration is forecasting that oil production could hit a new record for the Gulf of Mexico this year. It could hit an average of 1.9 million barrels per day this year and it could rise to 2 million barrels per day next year and this is up from 1.8 million barrels in 2018. The EIA also said that by the end of the year eight new deepwater projects would have started up and next year we're looking to see at least four more.
2019 E&P Highlights:
- Analysts Forecast Drop In US Shale Activity, Rise In Efficiency
- XTO Energy: Room To Run In US Unconventionals
- Shale Players Search For 'Happy Median' In Permian Basin, Eagle Ford
- Key Players: Shale Growth Slows For Top US Operators
- Problem Child
- Report Shows More Unconventional Potential In Anadarko Basin
- US GoM Oil Production Moves Toward Another Record
- Exxon Mobil-led Consortium Strikes Oil Again Offshore Guyana
- BP Green Lights $1.3 Billion GoM Project
- Cowboys Owner Jerry Jones Has Long-term Game Plan For Haynesville Gas
Rig count is up 13% in the last month. The most significant weekly rig increases by major basin were in the Permian (up four to 129), Gulf Coast (up four to 31) and Appalachia (up three to 35).
President Tayyip Erdogan said in August the field north of the Turkish coast in the Black Sea contained 320 Bcm of gas, making it Turkey's biggest natural gas discovery.
North Dakota’s oil production rose about 12% to 1.16 million barrels per day (MMbbl/d) in August as more wells and drilling rigs resumed production after a drop earlier this year, the state's regulator said on Oct. 16.