Race Is On to Frack Shale Fields Before Costs Explode in 2022

  • Bloomberg
  • Commodities News
Race Is On to Frack Shale Fields Before Costs Explode in 2022
Credit: © Reuters.

(Bloomberg) -- Explorers are racing to get frack jobs done in the Permian Basin and other U.S. shale-oil fields before higher prices kick in next year, according to research and analysis firm Lium LLC.

The number of hydraulic-fracturing crews deployed across the U.S. shale patch jumped by 10 in recent weeks to 230, Lium analysts said in a note titled “Permianflation” on Friday. A crew typically consists of 25 to 30 workers who operate a huge array of truck-mounted pumps, storage tanks for fluids and sand, hoses, gauges and safety gear. 

“Operators are accelerating completions activity in anticipation of 10-15% higher well costs next year,” according to Lium. “Rising well costs could slow down U.S. oil and gas production growth by putting pressure on maintenance capital scenarios.”

A number of shale explorers including Devon Energy Corp (NYSE: DVN )., Diamondback (NASDAQ: FANG ) Energy Inc. and ConocoPhillips (NYSE: COP ) warned investors this week that inflation could rise 10% to 15% next year as supply-chain snarls make equipment and labor more pricey. Explorers have said they’ve so far been able to manage rising costs through efficiency gains in the field.

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© Bloomberg. A pumpjack operates near a Nabors Industries Ltd. drill rig standing over an oil well for Chevron Corp. in the Permian Basin near Midland, Texas, U.S., on Thursday, March 1, 2018. Chevron, the world's third-largest publicly traded oil producer, is spending $3.3 billion this year in the Permian and an additional $1 billion in other shale basins. Its expansion will further bolster U.S. oil output, which already exceeds 10 million barrels a day, surpassing the record set in 1970.

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