- Associated Press - Sunday, May 10, 2015

OKLAHOMA CITY (AP) - Oklahoma energy companies are still drilling in spite of low oil prices, but they are putting off costly practices such as hydraulic fracturing until prices recover.

Drilled uncompleted wells are a new trend in the oil patch, led both by lower oil prices and the drastic technological and procedural changes the industry has experienced over the past decade, The Oklahoman reported Sunday (https://bit.ly/1IrvqHA ).

Continental Resources Inc. CEO Harold Hamm has said completion processes typically represent about 60 percent of the cost of a modern shale well.

“Why spend that money today to bring on production that’s going to be sold in a bad market? You don’t need to do that,” Hamm said at a recent energy summit in Houston.

It’s difficult to track how many wells have been drilled and left uncompleted, in part because states have different reporting requirements. Wood Mackenzie Ltd. and RBC Capital Markets LLC in March estimated that more than 3,000 wells nationwide have been drilled but not completed.

Data collected by Oklahoma City-based Oseberg indicates that companies are continuing to show interest in drilling wells. While the number of permitted wells has dropped in recent months, those numbers continue to far outpace the number of wells that have been fracked and completed.

“The big difference now is that you can own whatever you frack,” said Robert Dauffenbach, director of the Center for Economic and Management Research at the University of Oklahoma. “What historically has been the case is that there’s been a reservoir of oil and anybody who stuck a straw down there would get it. You had a fear that if you didn’t draw it out, someone else would get it.”

With modern drilling into shale or other dense rock, oil doesn’t flow throughout the reservoir. Companies fracture the rock immediately around the well bore to encourage the oil and natural gas to the surface.

The delay approach makes sense for companies that have ongoing contracts with drilling companies, Dauffenbach said.

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Information from: The Oklahoman, https://www.newsok.com


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