Shale Output to Drop | Russell T. Rudy Energy LLC
So says a recent article in “World Oil”. Crude output from super shale plays such as North Dakota’s Bakken and the Eagle Ford of South Texas is expected to fall in June and July. Some observers foresee output continuing to decline through the end of the year. With OPEC refusing to cut oil production from its current level of about 30 million barrels per day (bpd), the global glut would continue along with dropping prices. To counteract this trend, U. S. shale operators are expected to cut back production.
It should be noted however, that in spite of falling oil rig counts, production has still increased up to this point. Observers attribute this to increased rig efficiency and enhanced well performance. As fewer and fewer rigs are needed, operators can be very selective and utilize only the best rigs. To maintain profitability, they are also only drilling in the most productive “sweet spots” of oil fields. Consequently, in spite of the oil rig count falling for 26 straight weeks, production in March reached 9.53 million bpd, the highest level since 1972.
Nonetheless, the U. S. Energy Information Administration predicts that output from the Bakken and Eagle Ford will drop to 5.58 million bpd in June and to 5.49 million in July. This drop will be partially offset in the Permian Basin of West Texas and Southeastern New Mexico. There it is expected that production will increase by 3,000 bpd to 2.06 million in July.
Bill O’Grady, chief market strategist at Confluence Investment Management, observes that while we are seeing production go down, he questions whether the decrease is fast enough for prices to recover in the short term.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/6/08/america-s-shale-oil-boom-grinding-to-halt-as-opec-stands-pat .
