New York — Oil output in the biggest producing shale areas in the US is forecast todecrease 118,000 b/d in July from June to 4.723 million b/d, according USEnergy Information Administration estimates released Monday.
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The decrease was in line with the precipitous fall in oils rigs operatingin US shale. The rig count peaked in October 2014 at 1,609 and finished lastweek at 328, according to Baker Hughes data.
The steepest drop in production was expected in Texas' Eagle Ford shalewhere output is anticipated to shrink 58,000 b/d to 1.212 million b/d,followed by a 28,000 b/d decrease in North Dakota and Wyoming's Bakken shaleoil to 1.024 million b/d, according to the EIA's Drilling Productivity Report.
The largest oil producing shale region in the US, the Permian basin ofWest Texas and New Mexico, is forecast to lose 10,000 b/d of production to2.019 million b/d, the report said.
While production has continued to trend lower, the rigs still operatingare forecast to produce more barrels per day than before as drillingtechniques continue to improve.
In the Permian new-well oil production per rig is forecast to grow by 13b/d to 493 b/d, the Bakken is expected to increase new-well output by 17 b/dto 832 b/d, with the Niobrara and Eagle Ford each expected to grow new-wellproduction by 23 b/d to 915 b/d and 994 b/d, respectively.
SIGNIFICANT RIG ADDS NEEDED TO MAINTAIN PRODUCTION An EIA formula shows the Bakken would need to have 62 rigs operating, upfrom current 24 rigs, to maintain current production. The Permian basin wouldneed to have 150 rigs, eight more than now. The Eagle Ford would require 89rigs operating, from 26 currently and the Niobrara would need 31 rigs, 12higher than its current rig count.
The rig counts are according to Baker Hughes weekly rig count releasedFriday.
This estimate does not include production from the completion of DUCs(drilled but uncompleted wells), and producers have said they would work offtheir DUC inventory before adding rigs.
DUC inventory has been on a downward trend since May 1, 2015, when itstood at 7,363, compared to 6,376 as of March 1, 2016, according to an S&PGlobal Platts analysis.
The slow completion of DUCs has moderated the overall US productiondecline, however "US crude oil production has fallen by more than 0.9 millionb/d since April 2015 to an average of 8.7 million b/d in May 2016. Almost allof the production decline was in the Lower 48 onshore," EIA said it its latestShort-Term Energy Outlook on June 7.
EIA forecasts production to keep falling through Q3 2017 to an average of8.1 million b/d before turning higher.
--Benjamin Morse, firstname.lastname@example.org--Edited by Derek Sands, email@example.com