Permian Frackers Blame Supply Chain Bottlenecks For Stymied Growth

Rising rig counts, record forecast production from the Delaware Basin, and another forecast for record production for the whole Permian are just some of the latest news from the star U.S. shale play. And yet this production growth is much slower than it should have been and is likely to remain too slow, according to Irinia Slav, writing for

One reason is shareholders. As Bloomberg noted in a recent report on the state of the Permian, public shale drillers have switched their focus after years of putting everything into production growth and are now prioritizing the return of cash to shareholders. And the switch back appears to be unlikely at this point.

Another reason is rising production costs. International oil prices have been on a strong rise indeed, but so have production costs as the supply chain disruption effects of the last two years linger.

In late April, the Wall Street Journal’s Collin Eaton reported that the most prolific shale play in the United States was struggling to find enough steel, frac sand, frac pumps, and workers for wells.

Eaton noted that, unlike the last oil market downturn, the oilfield service industry is not riding on the heels of producers in the recovery. On the contrary, this time, the oilfield service companies are struggling after two years of mothballing equipment fleets because of the sharp contraction in output during the pandemic. They are also being largely shunned by investors, which makes them reluctant to invest in new equipment.

The report quoted industry executives saying that it now took a lot longer between drilling a well and getting it going because of delays in the delivery of essential equipment and materials. The costs of this equipment and materials are also higher.

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