US Shale Fracklog Triples As Drillers Keep Oil From Market

US Shale Fracklog Triples As Drillers Keep Oil From Market
Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they've drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows.

(Bloomberg) -- Think the U.S. is awash in crude now? Thank the fracklog that it’s not worse.

Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows. That’s almost as much as OPEC member Libya has been pumping this year.

The number of wells waiting to be hydraulically fractured, known as the fracklog, has tripled in the past year as companies delay work in order to avoid pumping more oil while prices are low. It’s kept crude off the market with storage tanks the fullest since 1930. The fracklog may slow a recovery as firms quickly finish wells at the first sign of higher prices.

“Once service costs come down and drillers begin to work through their higher-than-normal backlog, the market should start to price in that supply coming online,” Andrew Cosgrove, an energy analyst for Bloomberg Intelligence in Princeton, New Jersey, said by phone. “It may act as a cap on prices.”

Futures for U.S. benchmark West Texas Intermediate oil tumbled by more than $50 a barrel in second half of last year amid a worldwide glut of crude. They rose $1.58 to settle at $57.74 a barrel on the New York Mercantile Exchange.

Growing Fracklog

Oil production in the lower 48 states would rise 322,000 barrels a day to an average 7.485 million in the fourth quarter of 2016 if drillers start shrinking their fracklogs by 125 wells a month in October, Bloomberg Intelligence models show. The forecast assumes horizontal oil rigs fall another 10 percent through the third quarter and prices are unchanged.

A second scenario, in which crude prices rebound to $60 to $65 a barrel for an extended period and drillers put rigs back to work, increases supply by 500,000 barrels a day to 7.67 million.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Ted Lemp | Apr. 24, 2015
I thought the purpose of doing the well drilling in the USA was to bring the gasoline prices down and not to be like the oil companies of the eastern part of the world by robbing the American people.

Keith | Apr. 24, 2015
This is interesting but curious at the same time. We are aware that wells are being drilled but not completed, We are aware also that while recognising the reduction in deployed rigs, the media and parts of the industry are denying that production is falling. However, this article admits that completing these wells in the future can add to production, but you are telling us that while they remain uncompleted this month, the lack of completions is not reducing production. In other words, more completions mean more production but less completions do not mean less production. What? This is straight out of Orwells 1984. If you tell the lie often enough it becomes the truth.


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