EIA forecasts US shale production to fall 91,000 b/d next month

Next month, shale oil production in the US is forecast to decline 91,000 barrels per day (b/d) to 5.36 million b/d, according to the US Energy Information Administration’s (EIA’s) latest Drilling Productivity Report.

In June, the EIA projected a 91,000-b/d decline for July. The EIA forecast in April that shale production in the US would decline in May, marking the first such declines in more than four years.

The report focuses on the major shale plays in the US, including the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica shale plays. Oil production from these largest US shale plays will plunge in August for a fourth consecutive month. August’s expected decline of 91,000 b/d represents 12% over July’s forecast production decline, to 5.4 million b/d – the lowest level since November 2014 for these major shale plays. In recent years, these plays have accounted for 95% of US oil production increases and all US natural gas production increases during 2011-2013.

In August, production in the Eagle Ford shale play is expected to fall 55,000 b/d to 1.54 million, while Niobrara production is predicted to decline 20,000 b/d to 395,000 b/d. In the Bakken shale play, production is expected to fall 22,000 b/d to 1.18 million b/d.

One of the few production increases is expected to be in the Permian Basin, where production is forecast to grow 5,000 b/d to 2.05 million b/d.

New-well oil production/rig across the seven plays is projected to increase in August by a rig-weighted average of 10 b/d to 432 b/d, including a 26-b/d rise in the Bakken to 691 b/d, a 25-b/d rise in the Eagle Ford to 766 b/d, a 14-b/d rise in the Niobrara to 516, and a 12-b/d rise in the Permian Basin to 327 b/d.

Collectively, natural gas production in these major shale plays is expected to drop 260 MMcfd in August to 45.15 bcf, and only the Utica shale play is predicted to increase gas output, adding 22 MMcfd to reach 2.66 bcfd. The Eagle Ford play is expected to fall the most in August in gas output, with the EIA anticipating this play dropping 123 MMcfd to 6.97 bcfd.

Analysts with Global Hunter Securities commented, “We believe the EIA’s methodological bias toward rigs, in making its most recent monthly estimates especially for crude oil and condensates production, seems to pull the data toward a stronger downshift in production than is perhaps the case, in our opinion.”

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