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Permian, Appalachia to continue to pace US production surge

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Permian, Appalachia to continue to pace US production surge

The Permian Basin is expected to continue its staggering growth this summer, with the U.S. Energy Information Agency now estimating the play will surpass 3.2 million barrels of oil production per day while closing in on 10.5 Bcf/d of natural gas production in June.

In its May Drilling Productivity Report, the EIA estimated the Permian will produce just under 3.2 MMbbl/d this month before surging to nearly 3.3 MMbbl/d in June.

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The EIA estimated gas production of 10.27 Bcf/d in the Permian in May before reaching approximately 10.5 Bcf/d next month. If those estimates are correct, production in the Permian will have increased by about 400,000 bbl/d and 1.3 Bcf/d since January. Year-over-year, the EIA said oil production in the play will have increased by approximately 36% while gas production jumped nearly 27%, which could test the Permian's oil and gas takeaway capacity. The surge in production and forecast shortage in infrastructure has driven the spread between late 2018 Midland Basin crude oil futures and West Texas Intermediate crude futures over $15/bbl.

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Natural gas production in Appalachia, largely in the Marcellus and Utica Shales, also continues to climb. The EIA estimated production of nearly 27.77 Bcf/d during May, then approximately 28.15 Bcf/d in June. That would equate to a production increase of nearly 1.75 Bcf/d since January and nearly 5 Bcf/d since June 2017.

The Eagle Ford Shale is expected to be the fastest-growing oil producer from May to June, adding an estimated 33,500 bbl/d to push production to approximately 1.39 MMbbl/d.

Nationwide, the EIA expects shale oil production to increase to 7.18 MMbbl/d in June, up 27.6% since the same time last year. Shale gas production is expected to increase to approximately 68.1 Bcf/d in June. That is up by nearly 11.7 Bcf/d, or 20.7%, since June 2017.

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