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  • When Texas DUCs Go Quack, Quack, Frack

    Posted by Trent Telenko on May 26th, 2016 (All posts by )

    The “DUC” in this case being _D_rilled but _U_n_C_ompleted shale oil & gas wells

    I ran into this article by Seeking Alpha energy analyst Gary Bourgeault over on Real Clear Energy which gave a figure for how many drilled but ‘unfracked’ wells are available for the new extended oil flow fracking technique I mentioned in May 15th 2016 post Texas Fracking and the Death of Big Oil.

    The key passage from “U.S. Shale Oil Boom Over Says CSMonitor – Hahahahaha” below —

    DUC wells waiting in the wings
     
    Another major reason the shale boom isn’t over is the large number of drilled but uncompleted wells waiting to be brought into production. There is an estimated 5,000 in the U.S. which can be quickly brought to market when the price of oil is high enough to reward it. Some companies have been completing them for some time, and more are being completed in 2016.

    There are a lot of implications in that number. Starting with the fact that new oil & gas rig counts are going to be minimal for some time. And the hard economic fact that major politically event driven oil price spikes are going to be extremely short and will drop below 50 dollars a barrel within weeks to three months, given how fast these North American “DUC” wells can be fracked to bring product to market.

    This new age of “banked” cheap oil plays, and the resultant oil price stability, will see off both the “Big Oil” economic model and the political/corporate elites that live by it.

    Update May 27 2016:

    It looks like Zerohedge has come to the same set of conclusions about the “Big Oil” economic model with his post “Peak Petro-State – The Oil World In Chaos”

     

    14 Responses to “When Texas DUCs Go Quack, Quack, Frack”

    1. Michael Hiteshew Says:

      For those who are interested:

      http://eerscmap.usgs.gov/hfapp/

      Hydraulic Fracturing -The State of the Science: https://youtu.be/XnRH9i8hpbo

    2. Michael Hiteshew Says:

      Donald Trump Energy Speech at Petroleum Conference in Bismarck North Dakota (5-26-16)
      https://youtu.be/CqRkv9VTaMQ
      Bakken Forward>>> :-P

    3. Trent Telenko Says:

      Michael Hiteshew,

      Consider, “Stripper wells” are defined as 10-13 barrels of oil a day.

      At 100 barrels a day average for a DUC well being fracked, that 5,000 DUC well “Fack-log” represents potentially 500,000 additional barrels a day of American domestic oil production that can come on line in six-months to a year.

      If the average is a thousand barrels a play, that is 5 million barrels a day!?!

      And the extended fracking technique(s) means that production will stick around for four years before trailing off to stripper well status in another four years.

      The political effect of that “Frack-log”, and the new longer frack-plays, is to make obsolete the “Carter Doctrine” in the Middle-East because the Gulf Oil ticks cannot kill our economy with a oil price shocks like 1973 and 1979.

      The domestic economic effects of America being defacto energy independent are hard to say, other than both our economy and the dollar will be stronger without oil imports.

    4. Joe Wooten Says:

      Trent,

      A lot of the stripper wells are also in fields that are or were doing secondary recovery using salt water flooding. This adds extra expense of water separation in the fields.

    5. Jonathan Says:

      The political effect of that “Frack-log”, and the new longer frack-plays, is to make obsolete the “Carter Doctrine” in the Middle-East because the Gulf Oil ticks cannot kill our economy with a oil price shocks like 1973 and 1979.

      They never could kill our economy with oil price shocks. The illusion that they could was an artifact of our boneheaded domestic price control regime for refined products. Reagan put an end to that.

      By lowering the prices anyone can charge for crude and gas fracking defunds the oil states and reduces their influence. That is the main political outcome and desirable in itself. (Of course the lower prices are also a boon for energy consumers.)

      Obama’s nuclear deal with Iran is pernicious in part because the funds it unfroze replaced years of oil revenue for Iran. The whole ostensible point of the deal was to get Iran to change its behavior. The freed funds mean it doesn’t have to. This is another lesson, as if we needed it, to watch Obama’s actions and ignore his words.

      Domestically there’s always been a tacit coalition of Greens, other lefties and control freaks, and allies/agents of the oil states in opposing all measures that would have the effect of increasing domestic energy supplies.

    6. Mike K Says:

      “defunds the oil states and reduces their influence. ”

      It also defunds Russia which McCain called “a gas station with a foreign policy.”

    7. Trent Telenko Says:

      >>They never could kill our economy with oil price shocks.

      The Carter Doctrine is as much about Presidential careers as the economy.

      Ford and Carter both lost as incumbent Presidents, back to back, in part because of oil shocks.

      That threat no longer exists for the next President.

      Trump certainly recognizes that fact.

    8. PenGun Says:

      “a gas station with a foreign policy.”

      That can smash America flat. McCain is an idiot.

      You have a recently formed country by any standards and Russia has been crushing invasions, often at great expense for well over a thousand years.

      I know you lot like flash, but really Monty was among the best generals ever. He said after WW2 that the next war would be fought quite differently and the Rule one in Chapter one is “Never march on Moscow.”

    9. Michael Hiteshew Says:

      >>This is another lesson, as if we needed it, to watch Obama’s actions and ignore his words.

      I would say that is good life advice in general. It took me many years to learn that.

    10. Michael Hiteshew Says:

      There is a sand formation in the Permian basin called the Spraberry trend, first developed in the 1940’s, which will allow a driller to find a producing well pretty much anywhere in the counties where it is found. Drill a hole and get a well….After the bust in the 1980’s, the price didn’t even pay for the electricity to operate the pump jacks on existing wells, let alone cover well servicing operations or new drilling. This formation is underlain by another called the Wolfcamp shale, and there is a lot of activity in that formation these days, especially below 2 miles.

      The Wolfcamp Shale is the source rock for the oil that seeped into the Spraberry Trend sandstone above it. The Sprayberry simply acted as a reservoir. For decades, no one could figure out how to get the oil directly from the source rock itself. Fracking is the first step in our learning how.

    11. Mike K Says:

      “Russia has been crushing invasions”

      Speaking of idiots, nobody is advocating invading Russia.

      Be careful crossing streets penny. Look both ways,

    12. Joe Wooten Says:

      That can smash America flat.

      Penny, your Russian handlers sure are not getting much for their money. No one will have to invade Russia for it to fail. As long as the corrupt bunch running things there, it will fail on it’s own. No one need help them, except for to keep the price of oil low.

    13. PenGun Says:

      “Speaking of idiots, nobody is advocating invading Russia.

      Be careful crossing streets penny. Look both ways,”

      This was in response to “a gas station with a foreign policy.”

      Which is wildly stupid.

      My streets are usually empty, but I’ll be careful.

    14. PenGun Says:

      “Penny, your Russian handlers sure are not getting much for their money. No one will have to invade Russia for it to fail. As long as the corrupt bunch running things there, it will fail on it’s own. No one need help them, except for to keep the price of oil low.”

      This is America’s dream. It’s not real.

      As your oil production has been shut down by low prices, you have hurt yourselves almost as much as the Russians.

      As the sanctions imposed over the Ukraine forced Russia to impose sanctions in return, Europe has no market for a great deal of it’s exports. This has also forced Russia into making it’s own production of these things a priority and that has produced a small boom in this area of Russian local production.

      As we have slowly rising oil now, things are staring to change and Russia is entering a better time economically. As it managed this whole economic war very well it’s in a better position than most of Europe right now.

      As Putin continues to enjoy support in the 80%+ range, there is little evidence he has been in any way a bad manager of the recent escalations.

      Make no mistake, the reason Putin took Syria away from the awful cabal you have unleashed there, is payback for the Ukraine.