The production economics of the crude oil-focused SCOOP and STACK plays in central Oklahoma are among the best anywhere—in fact, only the Permian Basin’s numbers outshine them. But, as in the Permian, crude production in SCOOP and STACK can only grow if sufficient midstream infrastructure is in place to process and take away all of the associated natural gas the wells there produce. Processing and takeaway constraints aren’t big issues­ in SCOOP/STACK yet, but they will be soon. Today we discuss highlights from RBN’s new Drill Down Report on production growth and looming infrastructure constraints in two of the U.S.’s most promising shale plays.

The South Central Oklahoma Oil Province (SCOOP) and Sooner Trend Anadarko Canadian Kingfisher (STACK) plays in central Oklahoma have emerged as two of the most prolific and attractive shale producing regions in the U.S. The SCOOP/STACK region is much smaller than the Permian in West Texas and southeastern New Mexico, but the plays have similar characteristics. For one, SCOOP and STACK, like the Permian, are primarily oil plays but with significant volumes of associated gas and natural gas liquids (NGLs); further, they have very attractive producer economics in core areas, as well as resilient and increasing rig counts in those areas. And they share a robust outlook for future production. All that means 1) that more midstream infrastructure will be needed to support the production growth, and 2) that if new capacity isn’t added fast enough, takeaway capacity constraints could result in dire consequences for commodity prices within the region.

The potential for natural gas takeaway constraints resulting in the curtailment of drilling programs is a big deal for producers in plays like the SCOOP and STACK where the attractive production economics are heavily dependent on crude oil production. The gas comes out of the ground with the oil, and must be processed to extract NGLs and moved to market via pipeline or the oil cannot be produced. No producer wants to be placed in the position of cutting back an attractive oil development program because there is not enough processing and pipeline capacity to get their associated gas to market.