Permian, Bakken info experts say optimism is strong

By North American Shale magazine staff | July 14, 2017

The oil and gas markets research team at the Federal Reserve Bank of Dallas has always worked to provide interested parties from Texas, New Mexico and surrounding states with current information on the health of the regional oil and gas markets. Starting this year, Kunal Patel, the oil and gas markets insight leader for FRBD, has helped bring more information more often to the region. Through a series of slide decks, reports and information offerings, Patel and his team provide energy indicators and trends to those wanting basic information—what is a DUC—and those wanting complex insight—which factors are impacting oil prices this week.

Since the start of the year, Patel said one trend has been obvious: Activity in the region of the Permian has increased and it is looking strong for the future. Because Patel and his team conduct a 200-person survey every month, they know what businesses are thinking about hiring, activity levels and breakeven pricing. “Our contacts are increasingly having guarded optimism,” he said. Participants in the FRBD keep providing insider insight to the team for one major reason.

“There are a variety of surveys that the Fed uses to understand business conditions,” Patel said. But the energy-based survey is important for the team to use in its monetary decision-making process. “By being a part of the process [survey] they help to inform monetary policymaking,” he said.

In North Dakota, the Department of Mineral Resources often tries to collaborate with industry to stay current on industry trends and potential future issues. Lynn Helms, director of the DMR, also said Bakken-focused operations are optimistic about the current state of shale. “Industry appears confident that the fundamentals are there,” he said of the Bakken’s economics. “Regardless of what you’re seeing short-term on oil prices, fundamentally, inventories are going to come down, OPEC production cuts are going to do their job and we will see stronger prices out into the future,” he said. In fact, some Bakken producers are already proving his point. Accroding to Helms, some producers are now opening their wells “to their full potential,” he said. For the Bakken, the current issue is related to the availability of frack crews. Drilling rigs—now more than 55 operating—are outpacing the frack crews. Because of that, the DUC inventory could start to creep up again until more pressure pumping services are brought into the world-class play.