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Permian Producers Underreport Fracking Activity

Oil and gas producers in the Permian underreported their fracking activity by as much as 20 percent for 2018, energy-focused data analysis services provider Kayrros has reported.

According to data collected by the company, drillers in the Permian completed more than 1,100 wells that remained unreported last year. The total for the year, Kayrros said, was 6,394 wells, versus 5,272 wells reported to FracFocus, a public database of the chemicals that are used in hydraulic fracturing.

This discrepancy may not look like much on its own but it could have serious implications with regard to the available spare production capacity in the U.S. shale patch, Kayrros noted in its report. This difference of more than 1,000 wells means that while U.S. shale oil production has been rising steadily, it has been doing so thanks to more wells than most analysts know about. This may mean production levels per well as not as high as those same analysts have estimated based on the inaccurate data.

Misperceptions about shale oil in general and the Permian in particular have consequences, hence the importance of these measurements that show Permian production per well has been substantially overestimated,” said Andrew Gould, former senior executive at BG and Schlumberger and member of Kayrros’ advisory board.

“By the same token, average production costs per well are understated. With far more wells contributing to Permian and US oil production than accounted for, current shale oil production is substantially more water- and sand-intensive than is commonly believed.”

Based on this information, Kayrros analysts calculated that based on an average cost of a horizontal well completion of US$5 million, oil well operators in the Permian spent US$4.1 billion more last year than they reported. Frac sand and water consumption were also underestimated in official data because of this underreporting, with their own implications for the dynamics of the fracking segment of the energy industry.

By Irina Slav for Oilprice.com

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