Since very few wells drilled in the US produce without being hydraulically frac’d, it generally benefits the oil company to frac a new well soon after the well reaches total depth (or, TD). Back in the olden days of 2008, the typical lag time between TD and frac was 30-45 days. It went like this: one well per pad, most wells vertical, 5-10 stages, the frac crew in and out in a few days, and not a lot of sand.
In 2008, a well spudded on New Year’s Day would reach TD on January 31st. The rig would move off location immediately, a roustabout crew would set up a production tank battery by the end of February, and the frac would commence on March 1st. The well would be producing by March 15th.
For a variety of reasons, the lag between TD and frac is getting longer and longer and longer as each year rolls by. Consider this graph:
Lag Time Between TD and Frac
We analyzed the lag time between TD and frac for thousands of wells drilled from 2014 to 2017. For each year we calculated the percent of wells where the frac started within 50 days after reaching TD, or 50-100 days, or 100-150 days, or longer.
Here are three conclusions:
- In 2014, most wells were frac’d within 3 months of reaching TD. Very few sat drilled, but uncompleted for longer than 100 days.
- In 2015 the industry shifted dramatically, delaying frac jobs until several months after reaching TD. 30% of all wells had to wait 5 months or longer for a frac job. While these wells waited they were categorized as “drilled, uncompleted”.
- In 2017 only a quarter of the wells drilled got a frac job within 50 days. Wells sat in the DUC category far longer as 2016 turned into 2017, which turned into 2018. 2018 appears to be worst of the lot with lag times continuing to expand.
As 2018 rolls along, Permian Basin drilling continues to ramp up, but frac activity is clearly ramping down and operators slow the pace at which new oil comes on to a market that has scarce availability of pipeline takeaway capacity. When we build this chart next year, adding 2018, DUCs will be significantly larger because the lag time between TD and frac will be far greater than 100 days.
Imagine, you’ve bought a car, but you don’t get to drive it for 100 days. The streets are just too crowded. Each of your neighbors also has a new, shiny, undriven car. Now, who’s working on building roads?