This is happening in part because some drillers are moving beyond their best wells as more players pack into the Permian, according to IHS Markit analyst Raoul LeBlanc.
At the same time, the high demand for labor and equipment is causing producers to turn to workers who got laid off during the downturn and rigs that need investment after sitting idle. At the start of the recovery last year, a pool of workers and rigs that had not been out of the fields for long was still available, allowing production to rev up quickly early in the cycle.
“Technology marches in one direction. We’re not getting dumber, but some of the cyclical factors will unwind. We’ll see more of it particularly as costs continue to rise,” LeBlanc told CNBC.
The drilling recovery is beginning to spread beyond the Permian and Eagle Ford to North Dakota’s Bakken and the Niobrara, located in northeastern Colorado and parts of three adjoining states. EIA projects production will rise by 6,000 barrels a day in the Bakken and by 11,000 barrels a day in the Niobrara in July.
But production gains in these areas will be more muted than in the Permian, LeBlanc warned. A small number of specialist drillers are indeed increasing output, but there are just not enough players drilling in these regions to generate the kind of growth Texas is seeing, he said.
The EIA does not forecast output for the Scoop and Stack, two oil-producing regions in Oklahoma where activity has ramped up in recent years.
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