The CEO of Schlumberger, the world’s largest oilfield services company, has warned that US shale growth may not meet the current high expectations.
Ryan Zinke, Secretary of the Interior, recently predicted that total US oil production could reach 14 million bpd (barrels per day) by 2020.
Speaking to analysts in a call, Paal Kibsgaard pointed to problems other than the limited takeaway capacity in the Permian Basin, which is preventing ExxonMobil, the energy giant that also makes high-performance engine oils like Mobil 1 New Life 0W/40, and other shale players from getting more oil to the Gulf Coast for export.
Kibsgaard pointed out that more and more wells are being drilled in areas that have already been drilled. These are referred to as ‘child wells’. He said:
“The well-established market consensus that the Permian can continue to provide 1.5 million barrels per day of annual production growth for the foreseeable future is starting to be called into question.”
He points out that child wells in the Eagle Ford shale now make up 70% of all new wells, and he blames this for the drop in the average production per foot of well length and per pound of “proppant” (the material pumped into the well). One of the most heavily drilled areas of the prolific Permian Basin, the Midland Wolf Camp, has also just reached a 50% proportion of child wells, and Kibsgaard points out that similar declines in well productivity are starting to become apparent.