“Advances in hydraulic fracturing and horizontal drilling techniques have improved US oil and natural gas well productivity. The length of a well’s horizontal section, or lateral, which is a key factor in well-level productivity, has increased substantially for wells operating in the Permian region, from an average of less than 4,000 ft in 2010 to over 10,000 ft in 2022,” EIA said.
EIA evaluates natural gas well productivity based on a well's monthly average natural gas output. “In its first full month of operation, a well typically produces the most natural gas, followed by declining output in subsequent months. Permian region wells that have started operations so far in 2023 have produced on average 1.85 bcf of natural gas during their first full month of operations. Average first month production for Permian region wells has risen in recent years, averaging 1.83 bcf in 2022 compared with 1.3 bcf in 2017,” EIA said.
So far in 2023, natural gas production has increased in the Permian basin region even as the rig count has decreased. According to Baker Hughes, 322 active rigs were operating in the Permian basin as of Sept. 15, 31 fewer than at the start of the year.
EIA forecasts the price of WTI crude oil will increase in 2024, averaging $83.22/bbl compared with $79.65/bbl in 2023, partly because of Saudi Arabia’s extended crude oil production cuts. EIA expects that the higher crude oil prices will incentivize operators to produce more oil and, as a result, more natural gas in the Permian basin region.
