New Record? | Russell T. Rudy Energy LLC
Low economic break-even points and production cutbacks by OPEC, Russia, and their allies (N/OPEC) created the opportunity for other producers to increase output. Since the oil price collapse of 2014, we have learned that the surviving shale operators are resilient, resourceful, and quick to exploit an opening. Writing in “Oil Voice”, Julia Weiss with Norwegian research firm, Rystad Energy, makes the case that U. S. oil output could set a new record by the end of this year.
Rystad has found that so far this year, U. S. oil production is growing by about 95,000 barrels of oil per month. This net increase is almost entirely attributable to shale as incremental production from the Gulf of Mexico is merely offsetting declines in other conventional fields.
The U. S has not produced 10 million barrels a day since 1970. After years of declines, production once again approached this level in April of 2015 when output reached 9.6 million barrels of oil per day (bopd). Subsequently, production plummeted, but has since recovered at twice the rate at which it declined. The U. S. Energy Information Administration’s (EIA) latest official figures show total production at 9.1 million bopd in March, with an estimated year-end rate of 9.74 million. However, Rystad estimates that as of the end of May production has already reached 9.4 million bopd and predicts that the EIA will ultimately have to revise its estimate for year-end upward.
The negative implications for N/OPEC are obvious as incremental shale production is offsetting the cartel’s cutbacks. As Bjornar Tonhaugen of Rystad observed, “U. S. oil production has grown faster at $50 than any analysts in the market predicted. As these numbers are getting confirmed, the initial optimism about OPEC’s temporary cuts, may turn to increasing skepticism about OPEC’s choice of policy once the current output deal expires next year.”
To read the article in its entirety, please go to https://oilvoice.com/Opinion/5350/US-oil-production-could-reach-all-time-high-during-2017.
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