Why Exxon shale production per well is drpping
Exxon's Shale Output per well is falling while overall production is rising
ExxonMobil, better known as Exxon, has increased its oil production units in recent years. Total crude oil production has also increased.
But what about oil production per well?
Oil production per well has dropped by many barrels.
How is that to be understood?
This may sound confusing for the oil market as a whole. But most oil companies seem to have this problem.
As an oil company, Exxon focuses on oil supply and crude oil production. But the US oil industry claims that shale oil production is down for Exxon. But oil prices are not affected. But the question that member countries of OPEC, oil traders, and even oil authorities are asking is: why did this happen? Well, there can be many reasons why production per barrel is declining.
Here is a comprehensive analysis of this situation among oil producers. How is it possible that a company that produces millions of barrels and plays a key role in the global oil market is seeing a drop in production? There are many fracking facilities and refineries built by Exxon. Here we help you overcome any problems.
Reasons for the decline in the production rate per well
Many research reports are published by experts. We will look at these reports published by agencies such as the Energy Information Administration, etc.
But before we look at these reports, we need to know the reasons for the decline in the production rate per well in recent years.
Profit before production
According to International Energy Agency or the IEA, oil companies prefer profit over production. This makes it difficult for them to meet the minimum production per well. But it never affects their total oil production.
New units founded
The Exxon group has established many new units. These plants produce many barrels of oil every day. But there is a difference between the Brent crude oil production of the old units and the new units.
As the expectations for the new plants are higher, the oil production of the old plants is going down.
Drilling more strata
Whether it is oil imports or oil exports, drilling more layers is always the favorite task of oil production companies.
Many members of OPEC also do this. Drilling more strata attract the oil company, which then stops producing the old strata.
Age of the wells
In the first few months, the oil wells deliver high production and meet all the targets set. But after some time, the good production declines. This is due to the age of the oil wells.
Since when has the Output Dropping existed?
Now the question arises since when has Exxon's shale production per well declined? To get an answer to this question, we need to look at the production rates of the following years.
2017: High production target set
In 2017, everything went smoothly and there were no reports from experts or authorities about the decline in shale production.
Even ExxonMobil has set a target of 700,000 BPD (barrels per day) by 2025. The company has set a target of 700,000 BPD to be reached by 2025.
2018: Demand for oil products increased
According to global energy authorities, demand for petroleum products increased this year. As a result, production of all Exxon units increased to one million barrels per day.
However, there was a massive drop in production per well in shale rock.
2019: Production from Exxon's Delaware interests declined
In 2019, production from Exxon's Delaware holdings declined by many barrels per day. At its Delaware Basin interests in New Mexico, production fell to 512 barrels per day in 12 months.
However, subsequent shale oil production was 635 BPD.
2020: Production per well in Delaware was estimated at 501 BPD.
For 2020, complete data on production per shale well is not available. However, production per well in Delaware is expected to be 501 BPD. This is a decrease from last year.
What do the research and the experts say about this topic?
Let us now see what the experts say about this decline in production. Whether the experts see this positively or negatively. You have to consider the experts' views on this situation.
Occidental Petroleum & EOG Resources
Exxon held the first position among the companies with the highest shale production. However, according to a report published by Occidental Petroleum, Exxon has dropped from first place to 6th place, according to data published by Occidental Petroleum.
This group included the largest oil-producing companies and Exxon was one of the top companies in this group. EOG Resources also stated that Exxon lost its first place.
The IEEFA oil production analysis
The IEEFA (Institute For Energy Economics And Financial Analysis) found that Exxon's Delaware unit experienced a sharp decline during the pandemic.
However, IEEFA does not provide definitive data. But senior officials at that institute have often said so. The IEEFA analyst Clark Williams-Derry said shale production from Delaware wells is down.
The consulting firm IHS Markit
An analyst at consultancy IHS Markit, Raoul LeBlanc, said Exxon Group has focused on oil production Delaware Basin 2018. Due to the high potential and expected volume of oil production in the Delaware Basin the entire unit has focused on this.
Exxon's Take On Drop
Exxon does not see the situation as difficult for itself. Exxon's bigwigs always claim that shale production is increasing overall and even per well, and that all targets are being met.
Claims in investor presentations
In March 2021, Exxon Group held a presentation conference to attract investors. In this presentation, the company claimed that production per barrel was increasing.
Exxon told all investors that the company has a development unit in New Mexico and that production per barrel increased sharply in 2019-2020.
However, IEEFA reports that the company's claims are not true when we look at the data that was produced after thorough research.
Development in New Mexico
Julie King, Exxon's spokesperson, claims that development in New Mexico will increase production. She claims that the company has done the work to reach the target it has set for itself.
"All targets achieved in six years"
The vice-president of Exxon Neil Chapman is not prepared to accept that the company has seen a decline in shale production per well. In a media briefing, he claimed to have achieved all targets in the last six years.
He said the Permian unit has achieved all the production targets set by the company. However, IEEFA believes that Exxon is trying to encourage investors by claiming a high production rate.
Exxon's Shale Production Summary
There may be many reasons why Exxon's shale production per well is declining. But the Oil company's overall production is rising.
According to experts and other institutions, oil production per well is falling because the company's units are focusing on other priorities.
On the other hand, however, the Exxon company clarifies that production per unit or per well is not declining. The authorities have stated that the company is meeting all its production targets.
Start Getting Free Signals
10,040 registered users
550 users chatting now