Westwood Global Energy Group, energy market research consultancy, has published a new market outlook for the U.S. drilling and completion market for the period from 2018 to 2022.
The report is the result of a collaboration between Westwood’s expert oilfield services team and its most recent acquisition, U.S. energy market research company, Energent. Using Energent’s multi-million-well U.S. onshore database, the report details activity and associated expenditure forecasts for six unconventional oil and gas play: DJ-Niobrara, Eagle Ford, Haynesville, MidCon, Permian, and Williston.
The report presents a detailed outlook for expected expenditure 2018-2022 across 17 key service and equipment lines such as tubing & casing, frac sand, and pressure pumping. Importantly for oilfield services companies, it sees future expenditure weighted heavily towards equipment and services at the complete end of the market. For instance, in the DJ-Niobrara the average lateral length has increased 31% to 8,114 ft from 2014 to 2017. Meanwhile, completion expenditure will account for 64% of overall Permian spending in 2017, up from 42% in 2014.
All figures are based on an assessment of future oil prices that sees a gradual upwards increase within the $50-60/bbl range through to the end of the decade, before climbing to $68/bbl in 2022.
The report acknowledges that the market saw a particularly challenging period between 2014 and 2016 with a 79% fall in drilling expenditure over the same period.
Looking forward, it projects a significant and strong period of growth and expenditure for the U.S. onshore market between 2018-2022. Over the period, it expects a 9% annual growth rate in rig counts. And, of a total predicted expenditure of $554 billion, the report expects 66% of it to be spent on completions (53% in 2014) and 34% on drilling (47% in 2014).
Of the basics covered, it expects the Permian (in Western Texas and South East New Mexico) to account for 42% of total forecast drilling and completions spend.
Steve Robertson, head of oilfield services research at Westwood Global Energy Group comments, “It’s time to re-think how we measure OFS industry activity in North America. This report shows that the rig count is becoming less relevant and where we should focus our attention is well completions.”
This article originally appeared on Oil and Gas People website.