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The World’s Largest Oil Companies Are At A Crossroads

The World’s Largest Oil Companies Are At A Crossroads

International oil companies are feeling…

Colorado Home to Best-Value Frac Wells

Baker Hughes walking rig

The Denver-Julesburg basin in Colorado hosts the most commercial, or low-cost, fraclog in the United States, according to a study by Rystad Energy.

The costs per barrel of oil extracted after the wells are fracked equal US$4.70 and the basin holds almost 600 unfracked wells that await crews to complete the process.

A large number of incomplete wells have piled up due to delays by Anadarko Petroleum - the Texas-based company that operates half of Weld County’s fraclog. Three other companies--PDC Energy, Noble Energy and Whiting Petroleum--each preside over 10 percent of the uncompleted wells.

Related: Is America’s Vision for Renewal Energy a Mirage?

Rystad’s report says the drilled but uncompleted (DUC) wells become economical when the West Texas Intermediate (WTI) barrel price reaches just $30 a barrel. NASDAQ says WTI traded at $49.54 on Friday.

Reeves County in the Permian Delaware ($4.80 in costs per barrel) and McKenzie County in the Bakken ($5.10 in costs per barrel) also exhibited favorable economics.

Related: Why $50 Oil Is Here To Stay

The study implies that a major part of the US’ DUC inventory is profitable even as prices are low and recover only slowly.

The Wall Street Daily reported when oil solidly hits $50 dollars a barrel – which it briefly did earlier this week – a portion of 4,000 fraclogged wells could go online in a matter of months.

On average, it takes around 80 days to bring a fraclogged well back into production, according to Bloomberg. If 170 wells a month began producing oil, a fresh supply of 500,000 barrels a day would enter international markets – potentially causing another price drop.


By Zainab Calcuttawala for Oilprice.com

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  • ryan on May 31 2016 said:
    Good article.

    Nice hat.

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