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Shale output turns corner in February with gain in both oil and gas

New data from the U.S. Energy Information Administration published Jan. 17 implies that shale production of natural gas and crude oil likely turned the corner, as natural gas output increased for a second month and crude oil rebounded sharply.

The latest installment of the "Drilling Productivity Report" showed that total output of natural gas across seven key shale plays is likely to increase 329.63 MMcf/d in February to 47.97 Bcf/d, compared to the previous month. The increase in output would be the second consecutive increase and follows sharp declines in September 2016 and October 2016. From the same month a year earlier, February production is anticipated to be down 296.60 MMcf/d.

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Revisions were mostly to the upside, with production in January revised up by 130.60 MMcf/d, to 47.64 Bcf/d. The record high of 48.23 Bcf/d reached in February 2016 was revised up to 48.34 Bcf/d set in August 2016.

The largest upward revision to the January production estimate was made to the Bakken, which was raised 151.53 MMcf/d, to 1.75 Bcf/d. The Niobrara estimate was boosted by 131.23 MMcf/d to reach 4.43 Bcf/d in January. The Utica Shale witnessed a significant downward revision of 264.47 MMcf/d and was reported at 3.94 Bcf/d in January.

The EIA revises data as soon as confirmation is obtained that productivity has changed.

Natural gas production is expected to rise in five of the seven shale plays, with the Marcellus gaining the most on a volume basis at 187.85 MMcf/d above the previous month. Output from the Permian is anticipated to rise the most on a percentage basis with a gain of 1.4% from January. Only the Bakken and Eagle Ford are predicted to see sequential production declines in February.

While shale resources and production are found in many U.S. regions, the EIA's "Drilling Productivity Report" focuses on the seven most prolific areas, which are in the Lower 48. These seven regions accounted for 92% of domestic oil production growth and all domestic natural gas production growth during 2011 through 2014, according to the EIA.

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Production of crude oil is projected to gain 40.75 Mbbl/d from the prior month and reach 4.75 MMbbl/d in February.

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Revisions to the January production figure raised production by 164.75 Mbbl/d from the initial estimate, while the record high 5.47 MMbbl/d set in March 2015 was revised up from 5.46 MMbbl/d reported previously.

The trend in shale oil production has been uneven in recent months. The monthly gain in February followed a decline of 5.93 Mbbl/d in January, but that was reported as an increase of 1.39 Mbbl/d in the prior month's report.

Four of the seven shale plays showed sequential reductions in February, with the Bakken posting the largest decline, totaling 20.30 Mbbl/d. Output from the Permian Shale play is projected to gain the most at 53.14 Mbbl/d above the prior month.

The EIA's update of drilled but uncompleted wells showed an increase of 167 in December 2016 from the prior month to reach 5,379. Drilled-but-uncompleted figures for November 2016 were revised down by six, to 5,212.

The Permian gained the most in December 2016 by adding 137 wells, while the Marcellus partially offset the gains with a reduction of 10 wells.

Market prices and included industry data are current as of the time of publication and are subject to change. For more detailed market data, including SNL power and natural gas index prices, as well as forwards and futures, visit SNL Energy's Commodities Pages.