Report: Pipeline constraints could curtail $1.4 billion in Permian completions

Halliburton’s employees work at a fracking site in this 2017 photo. Hallibuton has terminated 384 workers at its Elmendorf operations center in southwestern Bexar County. Halliburton’s employees work at a fracking site in this 2017 photo. Hallibuton has terminated 384 workers at its Elmendorf operations center in southwestern Bexar County. Photo: Steve Gonzales /Staff File Photo Photo: Steve Gonzales /Staff File Photo Image 1 of / 5 Caption Close Report: Pipeline constraints could curtail $1.4 billion in Permian completions 1 / 5 Back to Gallery

Upwards of $1.4 billion in completions of oil and gas wells in West Texas' Permian Basin could be delayed or reallocated to other shale plays through 2019 due to pipeline constraints, a new report says.

The completion reduction is linked to the tightening of outbound pipeline capacity in the Permian Basin, which has been filling up throughout 2018 as production in the booming oil field continues to grow.

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The report was compiled by Westwood Global Energy Group, a London-based global energy consultancy firm, using data from Energent Group.

The Westwood report said that from the third quarter of 2018, which began July 1, through the end of 2019, 345 wells will not be completed. Also known as drilled but uncompleted or DUC wells, oil and gas companies have drilled the wells but have not hydraulically fractured, or fracked, them to begin producing oil and gas.

The Department of Energy estimated that in July 2018 there were 3,470 such DUC wells in the Permian Basin, the largest number of any oil and gas shale play in the country. That figure is 79.6 percent higher than the 1,932 DUC wells recorded in July 2017.

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The Westwood report notes that the deferred oil and gas completions in the Permian will lessen the pressure on related services like sand and water use and pressure pumping, all of which is used in the fracking process.

The other major Texas shale oil and gas play, South Texas' Eagle Ford Shale, is realizing better prices for its oil and natural gas liquids, according to Westwood. The firm expects the Eagle Ford Shale to have strong tailwinds through 2019 due to crude oil exports out of Corpus Christi, which have continued to grow.