The average productivity of new wells in the Permian basin is set to hit a record high in 2022, breaching 1,000 boe/d due to a surge in lateral well length, according to Rystad Energy research.
The previous high is 974 boe/d, achieved in 2021. Average daily production levels have climbed steadily since 2010, closely aligned with horizontal well length, which is expected to reach 9,500 ft in 2022.
Total completed lateral footage of wells in the Permian is expected to reach a record high of 50 million ft this year, beating 2021’s total of 45.8 million ft and past pre-COVID-19 levels of 47.5 million ft seen in 2019. In 2020, total lateral footage in the basin dropped due to the pandemic and reduced activity, reaching 32.5 million ft.
Operators began utilizing ultra-long wells up to 3 miles in length in the basin in 2014. In 2020, they represent 18% of completions compared to 4% in 2017. However, considering total completed lateral footage in 2021, these wells accounted for as much as 23% of completions.
The average horizontal well length in the Permian increased to 9,300 ft in 2021, up from 9,000 in 2020, bucking the overall trend of average US shale well lengths, which stayed relatively flat. The increase signals a growing trend among operators to favor longer wells with an eye on increased productivity.
“The Permian is now entering a 3-mile lateral era. Such long wells were viewed as inferior for their high finding and development costs in some deeper zones just a few years ago, but modern equipment and completion methods allow extended reach wells to spread across the entire basin,” said Artem Abramov, head of shale research at Rystad Energy.
The perforated length of the horizontal section of a well is viewed as a driver of well productivity and cost. When unconventional development began, most horizontal well lengths were under 5,500 ft (about 1 mile). As technology and mechanical capabilities advanced, well lengths increased, aiding increased production. Due to the front-loaded nature of unconventional oil production, well productivity is measured over the first 180 days following well production start.
Lateral footage of individual wells has expanded as operators increase efficiency and boost production. Ultra-long wells—typically 2.5-3 miles long—were widely tested in nearly all US basins between 2016-2018, but these lengths becoming the industry norm seemed unlikely.
However, it may be too early to view the increase in ultra-long laterals as an industrywide trend in the Permian. Some key operators contribute to this segment with a disproportionally large weightage relative to their total number of completions. For example, the largest Permian operator, Pioneer Natural Resources, accounted for 12.6% of the basin’s horizontal completions in 2020-2021—including wells originally completed by DoublePoint Energy, Parsley Energy, and Jagged Peak Energy. Yet, Pioneer accounted for as much as 18.6% of completions with a perforated length greater than 12,500 ft.