A new report suggests some of the older oil wells in the Permian Basin of West Texas and New Mexico might be drying up faster than some thought would happen.
The study by Wood Mackenzie Ltd. showed some maturing wells in parts of the Permian’s Wolfcamp shale lost nearly 15 percent of output annual five years after their startup, according to the Dallas Morning News. The firm had earlier predicted annual decline rates of only 5 to 10 percent.
While U.S. shale fields have been booming, analysts are now starting to wonder if long-term U.S. projections will hold up, offsetting decisions to hold off exploration elsewhere.
Older well declines “are a topic that oil market analysts and investors are always trying to wrestle with,” Jamie Webster, a senior director for oil at the Boston Consulting Group Inc. in New York, said by telephone. “It’s hard to get a good sense of it because of a lack of good, real-time data. But my sense is that they are starting to increase.”