America has strolled into 2015 claiming the title of the world’s top producer of petroleum and natural gas hydrocarbons. But thanks to low oil prices, holes are drilled but uncompleted, and according to a new analysis, America’s fracklog has skyrocketed.
A recent Bloomberg Intelligence analysis found that the number of wells waiting to be hydraulically fractured, known as the fracklog, has tripled in the past year. Researchers claim that 4,731 wells have been drilled but uncompleted in the U.S. in the midst of low oil prices. With storage tanks at their fullest capacity since the 1930’s, companies are keeping roughly 322,000 barrels of oil per day in the ground. To put that into perspective, that’s about the same amount Libya has pumped out this year.
Some analysts are worried about what will happen when companies get the first hint of a recovering market. With this many wells uncompleted and waiting for the opportunity to produce, the market could see yet another flood of petroleum commodity. This would mean a slower recovery overall for oil.
Bloomberg Intelligence models show that oil production in the lower 48 states would rise 322,000 bpd to an average 7.485 million in the fourth quarter of 2016 if drillers begin to shrink their fracklogs by 125 wells a month in October. They also predicted another scenario where crude could stabilize to $60-65 per barrel. In this case, rigs could go back online, and supply would increase by 500,000 bbd to 7.67 million.
According to the analysis, the Permian Basin of West Texas has the largest fracklog to deal with. Bloomberg Intelligence stated that as of February, the Permian had 1,540 wells waiting completion. A bit further south, the Eagle Ford Shale was tallied at 1,250. However the recent estimates from IHS claim that unfinished wells in south Texas number closer to 1,400.