Shale operators in the US have shrugged off earlier downbeat projections to produce more oil and gas despite the rig count declining.
In recent years, investors have been looking for greater returns from shale operations rather than rapid production growth, so operators have had to demonstrate that they can achieve growth in a measured way while delivering returns to investors. To achieve this, they have turned to drilling increasingly deeper lateral wells. Over the past 12 years, the average horizontal well has doubled in length, while over the last year, it has increased by 5% to reach 12,400 feet.
Range Resources CEO Dennis Degner states on an analysts’ call:
“As part of Q2, the team also added four wells with lateral length exceeding 20,600 feet. These represent the longest laterals drilled in the program’s history with the longest misery just under 22,000 feet.”
He also said that the lateral footage drilled each day on average had risen by 42% to more than 4,700 feet a day in the second quarter compared to last year, with this being driven by changes in rig equipment.
Big shale players like ExxonMobil and Chevron, the makers of the Mobil and Texaco grease and lubricant brands, have raised their full-year production guidance for this year of reported record production in the second quarter. Nevertheless, increasing the length of lateral wells will only yield returns in the short term. Sustainable production gains in the medium term will likely require a new technological breakthrough.