No sooner had the crude prices soared above $100/bbl than the industry professionals believed in an incredible growth of drilling activity in North America's largest shale patch. Analysts speculate that additional output of 500,000 barrels of oil daily would become a significant part (4%) of overall U.S. daily production. That is going to flatter oil and gasoline prices.
In spite of the raised pumping activity in the Permian Basin for the oil-thirsty countries, it is considered that the shareholders' returns and drilling costs would be in sight of producers.
Drilling permits in the Permian Basin are persistently growing, averaging approximately 210 at the beginning of April. Moreover, the permits trend is noticed as an all-time high as a total of 904 horizontal drilling permits were awarded last month.
Although weekly horizontal permit approvals have occasionally spiked above 200 in recent years, permanently elevated levels from regulators in Texas and New Mexico are unprecedented so operators are eager to expedite their development plans, trying to intensify the activity level in these areas.
Due to the growth in permit release, operators can increase the number of rigs in the second half of 2022. It predicts a noteworthy increase in supply capacity from the beginning of 2023.
Growing every day, the crude industry gives plenty of opportunities to develop different companies linked to it. Nowadays, learning and analysing the current situation and predicting the future development become easier with early activity tracking, a new service recently launched by Rextag. It allows to monitor well pad clearing, drilling operations, fracking crew deployment and completions with new data collected approximately every 2 days with the help of satellite imagery and artificial intelligence.
Rextag's Pad Activity monitor (#PAM) assists to learn about potential increases or decreases in oil and gas production months ahead of others and how potential volumes could impact storage and transportation across the Permian Basin.
This service cuts down activity reporting lag times by at least 98%, from 120-180 days down to just 5-8 days. Customers have access to reports, charts, tables, and mapping visualizations via Rextag's Energy DataLink easy to use web-based application allowing users to filter, download and identify activity on a map or data table. Additionally, customers will be able to set up daily, weekly, and monthly email report notifications.
The time between permit approval and the first day of drilling depends on the individual circumstances of producers, though the current situation indicates that drilling is expanding in the next months. It could not be considered as a temporary surge associated with major permitting round timings overlapping, as Permian drillers' plans will probably be upheld in the next weeks.
To adduce evidence to it, there is an increased number of approved permits recorded by large public and private operators in the Permian Basin even though independents took the lion's share of permits scoring 500 in March.
Moreover, the private operators are maximizing the production, exploiting half of the total rigs in North America, as the increased oil price is attracting their attention. They also secured more permits in March compared to the average rate in the last year.
While the increase in drilling will result in higher production, U.S. shale producers will have to overcome several hurdles including labor shortages and supply constraints.
