US oil production is booming at 10 million b/d, with the Permian at the centre of the action. In fact, Wood Mackenzie forecasts US Lower 48 crude production growth in 2018 will be approx 1.1mm b/d, with ~80% of it coming from the Permian.
But how long can this boom in production last? According to Jonathan Garrett, Research Director Lower 48 Upstream Oil and Gas at Wood Mackenzie, much of it will depend on how quickly and effectively operators develop and deploy new technologies that address key production issues.
New technologies such as diverting agents, microfracturing, coil-tipping fracs, and digitalisation (i.e. big data, predictive analytics, machine learning, etc.) all have the potential to increase production in the Permian. However, one of the most prevalent reservoir risks facing operators in the Permian today has to do with the geology of the play itself and the issue of parent-child well performance, i.e well-on-well interference caused by tighter well spacing.
Closely spaced 'child' well performance presents not only a risk to the viability of the ongoing drilling recovery, but also to the industry’s long-term prospects. Studying relationships between parent and child wells will be crucial to determining how much running room these operators have. Since publishing our Geology vs Technology report on child well performance risks, our analysts visited multiple operators to discuss the topic and learned that virtually every operator believes child well performance is a material issue, but there is no consensus on how to best address it. 2018 will be a year of trial and error due to the wide range of development techniques and views on optimal spacing.
