Fracking nears full rebound, but without the flaring

Apr 09, 2021

Paul Takahashi, Houston Chronicle | April 9, 2021

Hydraulic fracturing activity in North America has nearly recovered to pre-pandemic levels, but flaring levels remain historically low, according to a new report.

The number of new hydraulic fracturing jobs hit a 12-month high of 1,064 wells in March, setting the stage for oil production to rise in the second quarter, according to Rystad.

The Norwegian energy research firm said oil production in the Permian Basin has largely recovered from the February winter storm, which caused the largest disruption to U.S. oil production in its history. Rysad said it counted 429 new hydraulic fracturing jobs in the Permian in March, up from 260 in February and well above the 300 well completions needed to maintain pre-pandemic output.

“The Permian was disproportionally hit by the Texas winter crisis in February and activity in the region grew significantly in March,” Rystad’s head of shale research Artem Abramov said in a statement. “The basin is set for production growth already in the second quarter.”

Rystad warned that shale production could slow later this year as OPEC ramps up production and uncertainty looms over highly-contagious coronavirus variants, which threaten oil demand recovery. West Texas Intermediate, the U.S. crude benchmark, fell by 25 cents to $59.35 in early Friday trading as investors grew pessimistic over the rapid spread of virus mutations in Brazil and India.

Although oil and natural gas production is recovering, Rystad said flaring in major U.S. shale fields fell to its lowest level in four years during the first quarter to 270 million cubic feet per day, down from 300 million cubic feet per day in the fourth quarter of 2020.

Flaring during the quarter fell even though flaring in the Permian Basin temporarily spiked during the winter storm, Rystad said. Flaring intensity in the Permian Basin fell to 1 percent in January. 
All Permian sub-basins in Texas saw sequential declines in natural gas flaring from wellheads, while the Delaware North sub-basin in New Mexico saw an increase of 2 million cubic feet per day  during the first quarter, Rystad said.

Flaring is expected to rise from historically low levels as U.S. production ramps up. However, Rystad expects flaring may remain at lower levels as large publicly-traded oil producers focus on capital discipline and reducing harmful greenhouse gas emissions, in large part to woo back investors increasingly concerned about climate change.