Thousands of shale wells drilled in the past five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.
Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, reports The Wall Street Journal, citing an analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota.
Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas, according to data analysis from Rystad Energy AS, an energy consulting firm. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. Some companies are off track by more than 50% in certain regions.
Few U.S. shale companies disclose exactly how they make their forecasts—the systems they use and the assumptions they make to estimate well-by-well production—or whether their projections from years ago hit the mark. The fact that many have missed is an open secret in the industry.