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US unconventional oil output seen rising 96,000 b/d in January to 8.44 million b/d: EIA

Highlights

Permian makes up 74% of increase

Eagle Ford is 14% of climb, Bakken 8%

Mounting output due to rising rig counts

  • Author
  • Starr Spencer
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  • Jim Levesque
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US unconventional oil output is poised to rise by 96,000 b/d month on month to 8.44 million b/d in January 2022, according to data released Dec. 13 by the US Energy Information Administration, led by continued growth in the Permian Basin.

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By far, the Permian of West Texas/New Mexico should account for the largest jump of 71,000 b/d for a total production of 5.03 million b/d, the EIA's monthly Drilling Productivity Report said, topping the 5 million b/d mark for the first time.

Natural gas production nationwide should reach 89.35 Bcf/d in January 2022, up 341,000 Mcf/d month on month. Permian gas volumes should reach 19.69 Bcf/d, up 115,000 Mcf/d.

"The 96,000 b/d [oil growth forecast] is mostly due to more rigs – especially in the Permian, but also in the Eagle Ford and Bakken," EIA analyst Jozef Lieskovsky said during an online briefing.

For the week ended Dec. 8, 700 rigs were active in US fields, including 290 in the Permian, up from 650 nationwide in the first week of October.

"We are slowly adding rigs," Lieskovsky said. "In the Permian, we estimate now to be drilling 300 new wells per month," or a bit over one well per month per rig.

Historically, that rate has not changed much, although industry now drills longer, and in some cases much longer lateral, or horizontal, legs.

For example, the 5,000-7,000 foot laterals of seven or eight years ago have now become 10,000 feet and in some cases even 13,000-14,000 feet. Also, it takes less downtime to move to new locations, said Lieskovsky.

The Bakken Shale of North Dakota/Montana and the Eagle Ford Shale of South Texas, also two large oil reservoirs, and are pegged to increase oil output in January 2022 by nominal volumes each, according to the DPR. The Eagle Ford should gain 13,000 b/d, for a total 1.103 million b/d, while the Bakken should rise 8,000 b/d for a total 1.154 million b/d.

The smaller Anadarko Basin of Oklahoma/Texas Panhandle are seen inching up 2,000 b/d to 380,000 b/d in January 2022.

The Niobrara Shale in Colorado/Wyoming and Appalachia in mostly Pennsylvania/West Virginia should rise by 1,000 b/d each in the same time frame. That would lift the Niobrara to 616,000 b/d and Appalachia, which is mostly gas-prone, to 121,000 b/d.

The Haynesville Shale in East Texas/Northwest Louisiana is predicted to remain at 33,000 b/d in January 2022.

"In January, crude oil and natural gas productivity measures will likely be highest in the Eagle Ford region and Appalachian regions," Lieskovsky said. The EIA estimates crude oil production from new wells per rig will be about 2,400 b/d in the Eagle Ford region, he said. In Appalachia, gas production from new wells per rig is a little over 30,000 Mcf/d.

Falling DUCs

The drilled but uncompleted well count, also commonly known as DUCs, continues to drop. In November, it fell by 226 leaving a total of 4,855. By comparison, in January 2021 the DUC count was 7,437.

That is the first time the figure has been below 5,000 since November 2014, when it was 4,993.

About 46%, or 405, of the 885 new wells completed within the seven major DPR regions in November 2021 were in the Permian region, Lieskovsky noted.

"We are short about 100 wells per month in Permian," he said. "But the Permian is growing now, so you need fewer wells to keep production flat."

To keep production growing at the current rate, the basin needs about 90 more rigs, he added.

In addition, most DUCs are now older than two years, although well productivity is "strong, despite the fact that we are completing older wells," Lieskovsky said.

A low number of DUCs could hamper upstream operators' flexibility and choice of producing its best wells, he said.

"Running out of DUCs, in my view, won't be like running out of gas, but we may see fewer completions in coming months as the completions may not be as easily optimized," Lieskovsky said.