Bottlenecks curb output for shale player Sanchez

April 20 (UPI) — Despite gains in its drilling program, U.S. shale player Sanchez Energy said first quarter production was impacted by incidents outside of its control.

Total first quarter production for the company averaged 80,572 barrels of oil equivalent per day, divided more or less evenly between oil, natural gas liquids and natural gas. That’s at the low end of its second quarter guidance between 80,000 boe per day and 84,000 boe per day.

“Among the factors that impacted production were a weather-related disruption, a temporary third-party bottle neck in natural gas take-away capacity, and certain operational impacts stemming from the testing of a variety of completion methods across the asset base,” CEO Tony Sanchez III said in a statement.

The company during the fourth quarter outlined a capital spending program for 2018 that was between $75 million to $100 million less than last year. It’s one of the larger operators in the Eagle Ford shale basin in Texas and added more than 300,000 acres to its portfolio through an early 2017 acquisition from rival Anadarko Petroleum. Third quarter production increased 43 percent over the same period last year.

The Eagle Ford shale basin was in the path of Hurricane Harvey, which swept over most of Texas in early September.

Despite the lower production, the company said drilled, but uncompleted, wells it acquired in a separate agreement showed good rates of return because the capital needed to complete them was less than expected.

Wells completed loosely equates to the prospect for commercial operations, with completions indicating an operation is close to actual production. Uncompleted wells could indicate a potential slowdown in production

The International Energy Agency last month said it expected production from the Eagle Ford and Permian basins will increase by as much as 2.7 million barrels per day in the next five years. That means it’s critical that pipeline and port infrastructure developments keep up.

On the bottlenecks, Olivier Lejeune, an oil analyst at the IEA, said take-away capacity may be limited by the middle of the year.

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