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July 24, 2019

Kayrros data reveals underreporting of Permian fracking in 2018

Energy data analysis company Kayrros disclosed on 23 July 2019 that fracking in the Permian Basin was underreported by more than 20% in 2018.

By Umar Ali

Energy data analysis company Kayrros disclosed on 23 July 2019 that fracking in the Permian Basin was underreported by more than 20% in 2018.

Kayrros used proprietary algorithms alongside optical and synthetic aperture radar imagery tracking to determine that more than 1,100 wells in the basin were completed without being reported through the FracFocus public repository or state commissions.

The company’s data counted a total of 6,394 wells, 21% more than FracFocus’ estimate of 5,272 wells as of 20 June 2019.

According to Kayrros, this information reveals that the backlog of drilled but uncompleted (DUC) wells is significantly smaller than previously thought. This means the Permian Basin has a smaller inventory of DUC wells to complete in the event of an oil crisis, challenging the prevalent view that the basin has a large resource backlog.

This data also has implications for the efficiency of the Permian Basin, indicating that the average fracking well is less productive and higher-cost than public data had suggested.

Kayrros advisory board chair Andrew Gould said: “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.

“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.”

US shale oil has been the world’s fastest growing source of oil supply since 2009 and has helped the US become the world leader in oil production. As the most prolific basin in the US, the Permian Basin plays a significant role in the country’s onshore hydrocarbon production.

Kayrros chief analyst Antoine Halff said: “For all its revolutionary impact on the oil industry, shale remains poorly understood. Publicly available data based on old-fashioned company reporting have their limits.

“Hard measurements unlocked by new data technologies show that contrary to public belief, there is no great build-up of DUCs just waiting to be brought online. The whole idea that the market can rely on this sort of de facto spare production capacity is an illusion. The industry is actually running on a much tighter leash than that.”

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