DUCs Could Boost US Production by 250K Barrels Per Day

Within the next 18 months, roughly 250,000 barrels per day of oil could come into production as operators revisit their drilled, but uncompleted (DUC) wells.

Steady, if not painstakingly slow, increases in crude prices are making the wells more profitable to complete. At the mid-$40s level, these wells could turn a 10 percent profit, Ryan Duman, an analyst at Wood Mackenzie said, but in the $50s, they become even more attractive. 

“Our view is based on continuing commodity price improvement,” Duman said. “We see 2017 gas prices continuing to improve and crude prices largely remaining above $50 for 2017, which, based on DUC economics, would indicate that most every DUC that’s currently out there, is well within the money.”

That gives operators a cheaper opportunity to respond to higher commodity prices. The cost of constructing a DUC is roughly 70 percent of the total cost of a new well. To bring a DUC into production, there’s only the 30 percent of the cost left to fund as opposed to 100 percent of a new-build well.

Duman said the relative stability of $50 oil will provide an extra level of confidence needed for companies to put projects into motion.

“It’s the price point, in our minds, where a lot of activity begins to come back,” he said.

Whether that could mean a ramp up in hiring is unclear, Duman said. In the short term, companies will likely work with the frack crews that already have on the payroll. But in time, especially as companies pursue new drilling opportunities in places like West Texas, some hiring is feasible.

An award-winning journalist, Deon has reported on energy, business and politics for almost 20 years.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
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.

Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE

More from this Author
Deon Daugherty
Senior Editor | Rigzone
 -  The Rigzone Interview: Private Equity ... (Jul 13)
 -  Could Argentinian Politics Beat the Va... (Jul 10)
 -  The Rigzone Interview: Oil, Gas Goes D... (Jul 6)
 -  Deal Of The Month: EQT, Rice Energy Me... (Jun 30)
 -  OpEd: OPEC Production Cuts Fail, Marke... (Jun 27)


Most Popular Articles

From the Career Center
Jobs that may interest you
Load Planner/ Dispatcher Frac Sand
Expertise: Dispatcher|Project Management
Location: Mansfield, TX
 
Project Engineer
Expertise: Electrical Engineering|Instrument & Controls Engineer|Project Management
Location: Deer Park, TX
 
Operations Specialist - DJ Operations
Expertise: Operations Management
Location: Platteville, CO
 
search for more jobs

Brent Crude Oil : $48.06/BBL 2.51%
Light Crude Oil : $45.77/BBL 2.17%
Natural Gas : $2.97/MMBtu 2.30%
Updated in last 24 hours