Primary Vision has just released the Winter Update to its flagship Frac Spread Count Report. Many casual industry observers are familiar with the Baker Hughes count of active drilling rigs, but we believe it is just as important to track the number of active hydraulic fracturing operations, known as frac spreads. These frac spreads are units made up of fracturing pumps, data trucks, storage tanks, chemical additive units, hydration units, and blenders. We use cutting edge technology to tell our customers how many frac spreads are operating across the industry, along with granular data on each company in each shale play.
High Oil Prices Help North America Too
The Winter Update validates our previous predictions that, at least in a number of key basins, the industry is focusing on completing already-drilled wells. The drilled, yet uncompleted, wells are called “DUCS.” Many analysts have taken to calling America’s DUCS the “fracklog.” This abundance of pre-drilled wells allows American producers to ramp up production quickly if (and when) OPEC tries to drive up prices.
Data from the U.S. Energy Information Administration shows the number of DUCS at a record 7,483. Saudi Arabia is seeking to open its state oil company up to investors by the end of 2018, and it needs a high oil price to get the best possible deal. To that end, the Saudis have been doing their best to enforce production quotas on OPEC members. We believe based on our research that the OPEC deal on quotas is likely to hold for longer than most in the industry assume.
Rising oil prices have a very direct effect on the number of frac jobs completed each year. The count of active frac spreads has risen only slightly, because the U.S. fleet is largely already deployed, but the number of frac jobs completed is rising. 27,838 frac jobs were completed in 2014 before oil prices collapsed, and then the number dropped to 16,930 in 2015 and appears to have bottomed out in 2016 at 9,650. Activity has now turned around and in 2017, 11,826 frac jobs were completed as of the writing of this article (PV believes the total will be closer to 13,000 after all completion reports are filed). 2018 will continue the surge.
More Frac’ing Than Drilling
Most government and industry forecasts are overly focused on drilling and fail to properly account for completions. Their data is also often based on information that is dreadfully out of date, as it can take months for well activity to be reported, if it is at all. The EIA, for example, now estimates that U.S. crude will hit a record average of 10.6 million barrels per day in 2018 and gas will also hit a record of 80.3 billion cubic feet per day. We believe these estimates fail to account for the near full deployment of frac spreads.
Primary Vision continues to predict that companies will focus on DUCS, leading to more frac spreads than active drilling rigs in many regions. For example, in the DJ Basin-Niobrara, active frac spreads surpassed drilling rigs in early 2017 and have maintained a steady lead.
Similar dynamics were at play in the Williston and Utica plays. We also look for operators to further explore the Duvernay and Montney formations which seem oil-abundant in western Canada.
Get Your National Frac Spread Count Winter Update Today
Our reports are trusted by companies large and small, as they are a unique source of both industry-wide frac’ing activity along with more detailed data focused on each company and each play. Our proprietary system collects data from countless public and private sources and uses sophisticated techniques to produce real time frac spread counts from this sometimes dated and incomplete data. We also have detailed data on water, proppant, and chemical usage. Get in touch with us today to subscribe to our reports or just order a sample.