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Permian Basin Once Again Nation’s Top Frac Crew Destination, as Coronavirus Lockdowns Ease

Permian Basin Regains Status as Top Frac Crew Destination | New Mexico Oilfield Accident Lawyer

One month after losing the throne to the Marcellus Shale, the Permian basin reclaimed its status as the nation’s top destination for frac crews.

Permian Basin Drilling Slowed Amid Coronavirus, Falling Oil Prices

The Permian basin surrendered the top spot in May, following worldwide coronavirus lockdowns that triggered an unprecedented drop in oil prices.
As drillers shut-in dozens of wells across West Texas and southeastern New Mexico, just 30% of the nation’s working hydraulic fracturing crews were operating in the Permian. While the pandemic also took a toll on natural gas prices, the impact was nowhere near as dramatic, allowing the Marcellus Shale’s share to reach 31%.

36% of Nation’s Frac Crews Operating in Permian Basin

Since then, however, the easing of lockdowns around the world has allowed some stability to return to the oil market. Prices for West Texas Intermediate now hover around $39 per barrel – enough for Permian basin drillers to turn a profit.
According to Houston investment advisory firm Tudor, Pickering, Holt & Co., at least 10 frac crews returned to West Texas and southeastern New Mexico during June, increasing the Permian’s share to 36%.  The Marcellus Shale fell to 27%, while the Eagle Ford Shale in south Texas accounted for 12%.
Between 80 and 85 of the 450 frac crews available in the United States and Canada are now deployed in the field, up from 70 in May.  With the market seemingly stabilized, the report predicts fracking activity will inch up again in July and continue to improve through October.

Oil Recovery Uncertain Amid Ongoing Coronavirus Pandemic

There are other indications that the Permian basin is poised for a comeback.
During the first week of June, for example, 42 companies filed 109 new drilling permits with the Texas Railroad Commission, more than double the filings from just a week earlier. Nearly half sought to drill new horizontal wells in West Texas.
Yet drilling activity in the Permian basin remains well below last year’s levels, and the oil market’s complete recovery is by no means guaranteed, at least in the short-term. In fact, Coronavirus infections continue to mount in the United States, with Texas and several other states forced to slow their reopening plans after hitting records for new cases and hospitalizations in recent days.
“There will be some kind of decline in demand if cases were to increase as people will stay at home,” Howie Lee, an economist at Singapore’s OCBC Bank, told Reuters earlier today. “The pace of U.S. demand recovery will not be as steep as expected.”
And while some producers have resumed drilling, the number of oil and natural gas rigs operating in the United States remains at an all-time low for the ninth week in a row.

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