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Has Permian productivity peaked?

By Nicholas Cunningham - posted Monday, 5 June 2017


But it isn't all rosy for service companies either. Fuel Fix notes that they have to rebuild their rig fleets after scrapping so many during the last few years. Also, finding enough people to return to work after savagely cutting payrolls will be a challenge.

Overall, however, production is still expected to increase. Generous financing from Wall Street will ensure that capital is not a limiting factor. Consequently, the shale industry will continue to shower West Texas with money, rigs and people. Oil will flow in larger volumes this year and probably next year, barring another downturn. The Permian, for instance, is still expected to add more than 70,000 bpd of additional output between May and June.

Also, OPEC's determination to prevent another downturn in prices provides some certainty to shale drillers. OPEC is erasing some of the risk for drillers to deploy resources in the Permian. On an annual basis, the EIA estimates that US oil production will average 9.3 million barrels per day (mb/d) in 2017 and a staggering 10.0 mb/d in 2018.

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But if well productivity has peaked, the marginal barrel will be a bit trickier to produce next year than it was in, say, late 2016.l

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This article was first published on OilPrice.com.



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Nicholas writes for OilPrice.com.

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