American Oil and Gas Reporter - August 2021 - 57

SpecialReport: Fracturing Tech
Rig additions are catching up as we see the pace of frac
spreads slowing, but rigs are being deployed at a rising pace to
reach about 650 by year's end. The trend will continue into next
year, with more activations of rigs and spreads, but we expect
to see rigs outpace completion crews in the first quarter as well.
At peak levels, the spread between crews and rigs was 0.48, but
we currently sit at 0.4949 (after peaking at an all-time high of
0.5011). We expect to see the spread drift lower to a more reasonable
0.45 ratio, and it will not be because spreads are
dropping, but rather because rigs are catching up with activity
(Figure 1).
DUC Inventories
The pace of spread additions was robust off the lows with a
near 45-degree angle as companies worked through drilled but
uncompleted well inventories to stem decline curves and set up
for growth (recovery) in 2021. The industry was drilling wells
throughout 2019 and early 2020 to keep production growing
and above 13 MMbbl/d. Wells also were drilled for the parentchild
programs that were found to cause communication, loss
of pressure and weaker results, which is a long way of saying
that not all DUCs are created in the same way.
FIGURE 1
U.S. National Frac Spread Count vs Total Baker Hughes Rig Count
2000
Hi: 1931.00
Hi: 503.00
XDUSFA Index (R1) 243.00
Last Price
BAKETOT Index (L1) 491
400
1500
300
1000
-36.22%
200
500
The U.S. Energy Information Administration's DUC data is
a rough estimate. Some of these assets may never be completed
because of issues such as falling out of zone, failed drilling programs,
poor acreage or simple inadequate prices in a specific
area. There are also more DUCs in some regions versus others,
which means some areas provide additional running room. Operators
effectively have used the excess capacity (that is no
longer necessary at those elevated levels) to stabilize decline
curves and recover some production growth. Now we are back
down to 2018 DUC levels (Figure 2), which just so happen to
be a similar level of shale production (Figure 3).
There are still some DUCs, depending on the basin (Figure
4). However, some areas, namely the Bakken and Eagle Ford,
need to see rigs come back to start replacing inventory at a
faster pace.
The goal going forward is not to reach 13.2 MMbbl/d13.5
MMbbl/d, but rather to fit within the confines of what
the market can tolerate: 11.7 MMbbl/d-12.0 MMbbl/d. Depending
on the global recovery, the market may be able to
support 12.3 MMbbl/d, but that would constitute the peak
during the next few years. Members of the Organization of
Petroleum Exporting Countries, Russia and non-OPEC nations
491
-74.27%
Low: 244.00
XDUSFA Index / BAKETOT Index 0.4949
Low: 41.00
Hi: 0.5011
0.4949
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
Low: 0.1033
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AUGUST 2021 57
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American Oil and Gas Reporter - August 2021

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