Hydraulic fracturing (fracking) activity was underreported by 21 percent in the U.S.’ most prolific basin in 2018, according to Kayrros, a data analytics company serving the energy markets.
In findings released Tuesday, Kayrros claims that more than 1,100 wells were completed in the Permian Basin but not reported through state commissions or FracFocus – a public repository for information on chemicals used during fracking.
Kayrros claims that this means that oil inventory is smaller than assumed. From the article, this appears to be connected to short-term oil inventory, DUC (drilled but uncompleted) wells. And that wells are less productive then anticipated. The article also argues that 2018 capital expenditures are underestimated by $4.1 billion. I'm not sure about the capital expenditure claim. They appear to be backing into the number, but wouldn't the 2018 financial statements include these additional expenditures? Part of me feels that maybe drilling costs are lower than the assumed $5 million that is used in the article.
Kayrros claims that 1,100 wells were completed in the Permian Basin that wasn't reported to the state commissions or FracFocus. Via EIA, DUC for the Permian Basin in June 2019 stood at 4,002. If true, the real DUC is more than 25% less than reported by the EIA, more like 2,900. (Then there's probably a percentage of that, which will never get completed.)
What seems to tie out to various reporting done by the Wall Street Journal is that wells are less productive then anticipated. So will shale oil production keep increasing or will the Permian be lucky to just keep oil production flat.
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