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Total US shale production projected to fall in January as DUCs decline: EIA


US shale oil expected to fall below 7.5 million b/d in January

New well productivity per rig continues to decline

US DUC count dips to 7,330 wells in November

  • Author
  • Jordan Blum
  • Editor
  • Jeff Mower
  • Commodity
  • Natural Gas Oil

US shale volumes and new well productivity per rig are both expected to fall month-over-month in January as the industry enters the winter season and the number of drilled, but uncompleted wells continues to decline, the US Energy Information Administration said in its Dec. 14 drilling productivity report.

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US unconventional oil output is projected to dip another 137,000 b/d to 7.438 million b/d in January, according to the EIA, after peaking at about 9.1 million b/d at the beginning of 2020 before the coronavirus pandemic waged war on global oil demand. The EIA revised up its December estimates from 7.513 million b/d from its November report to 7.575 million b/d.

Crude oil production is expected to fall in every basin from December to January, led by a decline in the Permian Basin from 4.240 million b/d to 4.196 million b/d, a monthly loss of 44,000 b/d. Natural gas output also is projected to trend downward everywhere except the gassy Haynesville Shale, which is expected to tick up only slightly from 11.30 Bcf/d in December to 11.31 Bcf/d in January.

Total US shale gas output is expected to fall by 744 MMcf/d from December to January to 80.777 Bcf/d, according to the EIA report. Because of all the associated gas in the Permian, the West Texas-New Mexico region is also projected to see the biggest drop off in gas production as well, losing 157 MMcf/d.

Apart from some drillers taking holiday breaks, oil and gas output is expected to keep falling in the short term because nearly all the shut-in volumes from the peak of pandemic lockdowns have returned and new drilling isn't keeping pace with the decline rates of shale wells, analysts have said. Front-month NYMEX WTI may be hovering near its highest levels since March at about $46/b, but that's still not enough to spur much new activity.

In recent months, new well production per rig also has been on the decline, falling from 1,036 b/d in December to 1,025 b/d in January, according to the EIA report.

Drilling inventories also are falling as the number of drilled but uncompleted wells, called DUCs, continues to decline almost every month.

From the 7,835 DUCs in June 2020, the DUC count has declined to 7,330 in November, down about 6.4%. The DUC count is down from 7,474 wells in October, according to the EIA, nearly half of which are in the Permian.

The Niobrara Basin in Colorado and Wyoming saw the most DUCs completed from October to November with its DUC count dipping by 41 wells to 456.

Basin breakdown

Outside of the Permian oil and gas declines, South Texas' Eagle Ford Shale is expected to experience the biggest production drop off from December to January. The Eagle Ford's crude output is projected to dip below 1 million b/d, falling by 26,000 b/d to 987,000 b/d, the EIA said.

Both the Niobrara and North Dakota's Bakken Shale would lose about 23,000 b/d in January. The Bakken is expected to produce 1,197 b/d of crude in January, while Niobrara output would fall to 532,000 b/d.

Oklahoma's Anadarko Basin would lose 20,000 b/d in January, dipping to 363,000 b/d, according to the EIA.

In terms of gas, the Anadarko would fall by 155 MMcf/d to 5.999 Bcf/d, while the most prolific Appalachia region would fall 154 MMcf/d to 33.468 Bcf/d in January, the EIA said.