Four Charts That Show DUCs Are Soaring in US Shale Fields
There is no single reason that they all exist—and bringing them all on line will face challenges.
For a number of reasons, the US inventory of drilled-but-uncompleted wells (DUCs) has swelled from almost 4,300 to more than 8,200 in under 5 years. The new figure reflects estimated totals through August and is the highest ever seen, according to data from the US Energy Information Agency (EIA).
A large number of these nonproducing assets were drilled in the country’s four largest oil-rich basins in just the past 2 years as crude prices rebounded from their lows, stabilized around the $50/bbl milestone in December 2016, and then moved past $70/bbl this summer.
The growth figures have been most pronounced in the Permian Basin, where more than 3,600 wellbores remain waiting for completion. In the next three largest oil-rich basins, the combined DUC count is just over 3,300.
According to the EIA, a DUC is defined as a new well after the end of the drilling process, but its first completion process has not been concluded. For the purpose of EIA’s estimates, the end of the drilling process is estimated to be 20 days after drilling has commenced.
Anadarko Basin's Three-Fold Increase
The Anadarko Basin, which includes the heart of Oklahoma’s oil patch, has seen its DUC count grow from about 300 to more than 1,000.
Bakken Shows Relative Stability
Asset teams in North Dakota’s Bakken Shale have shown the most constraint on drilling nonproducers compared with those running rigs in other major oil basins. Since 2014, the total has increased by only about 150. When oil prices found stability at around $50/bbl, the DUC count followed with a drop, before rising and settling at about 750 since the start of the year.
Eagle Ford Shale DUCs Surpass 1,500
For almost a year, the Eagle Ford Shale in Texas has seen strong growth in its DUC population, and since 2014 it has grown by more than 1,100. The latest upward trend began in February when the region’s rig count broke 80.
Everything is Bigger in the Permian Basin
The most dramatic pop in DUC numbers is in the Permian Basin, which spans portions of Texas and New Mexico and is currently the most active drilling area in the world. There, the DUC count has grown by 473% since 2014 to 3,630.
A Spectrum of Motivations
There are several widely acknowledged drivers behind the rise in DUC counts:
Midstream bottlenecks (especially the case in the Permian Basin)
Completion crew shortages
Capital expenditure constraints
Cube developments that involve drilling 20 or more wells at once before bringing them on line
Converting DUCs Face “Major Challenges”
Schlumberger researchers recently examined what they see as “major challenges” surrounding the future of DUCs. Their work was published in the latest issue of the peer-reviewed SPE Reservoir Evaluation & Engineering technical journal (SPE 185753). The study outlines several key aspects required to understand the potential value of completing a DUC—all are related to well spacing and the effects of reservoir depletion. Though the work focused on case studies from the Williston Basin, the regional home of the Bakken Shale, the lessons within could be applicable to all oil-rich shale plays.
The barrier to completion for many of the idle wellbores in the infill drilling scenario is likely to be defined by reservoir pressure depletion through production, which has changed the shale sector’s views on optimal well spacing. The simplest explanation here is that some wellbores are drilled too close together in certain areas, or have been on production for too long, to make a DUC an economic success.
Specific considerations from the Schlumberger study include:
The risk of production-harming inter-well interference, i.e. frac hits
Fracture-height growth that leads to inter-formation production interference
Drainage patterns and recovered volumes may leave only a small amount of oil for a DUC to capture.