Tuesday, August 18, 2020

Rystad: "U.S. Oil Drillers Look To Restart Shut-In Production This Year"

From Rystad Energy via OilPrice, August 15:
Most US onshore operators will restore nearly all shut-in oil volumes by the end of the third quarter, with only a handful maintaining some level of curtailment for the rest of the year, a Rystad Energy analysis of 25 public oil operators’ second-quarter earnings statements shows.

Curtailments from the 25 companies peaked in May with a net 772,500 barrels per day (gross – including royalties to the government - 965,600 bpd) taken off the market. Total cuts decreased to a net 680,300 bpd in June. In July, only about 306,500 bpd in net volumes (383,100 bpd gross) remained curtailed. This number is expected to fall to a net 74,300 bpd (92,900 bpd gross) in August, with nearly all production set to be reactivated by September and just a small amount remaining offline.

The cuts monitored in the sample group were implemented mostly in April and May, and were entirely driven by economic and technical considerations, with operators shutting in lower margin wells while reducing flowback on others. A recovery in oil prices in the second half of May and a stronger overall market outlook prompted many producers to re-evaluate their shut-in plans.
As a result, the actual total cut in May for several operators was lower than earlier guided, and June curtailments decreased month-on-month. Nearly all operators said they did not face any issues in bringing volumes back online as per schedule, as they had already worked on issues such as maintaining reservoir pressure and well integrity even before they began moderating output or shutting in wells.
EOG Resources highlighted that reactivation led to flush production before wells returned to standard profiles, which resulted in better-than-expected overall performance from these wells. Instances of flush production are already reflected in June well production data....