Oil output in the biggest producing shale areas in the US is forecast to decrease 118,000 b/d in July from June to 4.723 million b/d, according US Energy Information Administration estimates released Monday.
The decrease was in line with the precipitous fall in oils rigs operating in US shale. The rig count peaked in October 2014 at 1,609 and finished last week at 328, according to Baker Hughes data.
The steepest drop in production was expected in Texas' Eagle Ford shale where output is anticipated to shrink 58,000 b/d to 1.212 million b/d, followed by a 28,000 b/d decrease in North Dakota and Wyoming's Bakken shale oil to 1.024 million b/d, according to the EIA's Drilling Productivity Report.
The largest oil producing shale region in the US, the Permian basin of West Texas and New Mexico, is forecast to lose 10,000 b/d of production to 2.019 million b/d, the report said.
PRODUCTIVITY INCREASES
While production has continued to trend lower, the rigs still operating are forecast to produce more barrels per day than before as drilling techniques continue to improve.
In the Permian new-well oil production per rig is forecast to grow by 13 b/d to 493 b/d, the Bakken is expected to increase new-well output by 17 b/d to 832 b/d, with the Niobrara and Eagle Ford each expected to grow new-well production by 23 b/d to 915 b/d and 994 b/d, respectively.
SIGNIFICANT RIG ADDS NEEDED TO MAINTAIN PRODUCTION An EIA formula shows the Bakken would need to have 62 rigs operating, up from current 24 rigs, to maintain current production. The Permian basin would need to have 150 rigs, eight more than now. The Eagle Ford would require 89 rigs operating, from 26 currently and the Niobrara would need 31 rigs, 12 higher than its current rig count.
The rig counts are according to Baker Hughes weekly rig count released Friday.
This estimate does not include production from the completion of DUCs (drilled but uncompleted wells), and producers have said they would work off their DUC inventory before adding rigs.
DUC inventory has been on a downward trend since May 1, 2015, when it stood at 7,363, compared to 6,376 as of March 1, 2016, according to an S&P Global Platts analysis.
The slow completion of DUCs has moderated the overall US production decline, however "US crude oil production has fallen by more than 0.9 million b/d since April 2015 to an average of 8.7 million b/d in May 2016. Almost all of the production decline was in the Lower 48 onshore," EIA said it its latest Short-Term Energy Outlook on June 7.
EIA forecasts production to keep falling through Q3 2017 to an average of 8.1 million b/d before turning higher.
