Posted on 04/14/2015 5:33:27 AM PDT by thackney
The shale oil bonanza that made millionaires from Texas to North Dakota is slowing down for the first time in years, a sign that painful industry cutbacks are starting to have an impact.
The nation’s oil production is set to slip this month by 57,000 barrels a day as natural declines in older shale wells outpace gains from newly drilled wells, the U.S. Energy Information Administration said in its monthly drilling report on Monday.
More than 70,000 barrels of oil a day are expected to be lost from April to May in North Dakota’s Bakken Shale, South Texas’ Eagle Ford Shale and the Niobrara Shale in Colorado, Wyoming, Kansas and Nebraska. That handily beat out forecasts for Permian Basin’s increase of 11,000 barrels a day in West Texas and the Utica Shale’s 2,000 barrel a day boost in eastern Ohio.
The EIA’s report comes as oil traders are watching for any sign U.S. oil companies will stop pumping as much crude amid an oversupplied global market. Any relief could help lift crude prices after a volatile nine-month slide.
The EIA had said in March the same three shale plays would see output fall in April for the first time in six years. The losses were masked by gains in the Permian Basin.
Oil companies have cut billions out of their spending plans this year and have sent more than 900 U.S. drilling rigs to the sidelines in recent months. But U.S. output could be declining in part because oil companies are storing crude in wells that have been drilled but not completed.
Analysts say firms have reason to start pumping some of the stranded crude as prices have edged up, but they risk flooding the market if they start producing all at the same time. That could keep prices down.
The EIA says output in the Eagle Ford could fall by 33,000 barrels a day to 1.69 million in May; the Bakken is set to decline by 23,000 to 1.29 million; and the Niobrara is expected to see 14,000 barrels a day evaporate, with monthly production dropping to 403,000 barrels a day.
The oil isn’t going anywhere. One day prices will rise and technology will improve and shale will be profitable once more.
As it has always been in the oil patch, boom followed by bust sine 1859.
Shale is still profitable today.
Not as much of it as was profitable at $100. But we are still drill and producing from the shale plays.
Unless Saudi Arabia purchases the unprofitable rigs.
War in the middle east can skyrocket the prices. There is enough production that the off/even days to purchase gas will not reappear. If the oil industry had decent regulations we would have cheap gas and the oil companies would be able to sell overseas with government manipulation.
A little off topic but I wanted to know if learning Arabic was an important and needed skill in the oil/gas industry. My local ISD decided to open up an Arabic Immersion school in my neighborhood. They cite growing Arabic community as well as a projected need for Arabic speakers. Anyone know if this is BS?
A really big one yes. They appear to be used to having little wars with little effects on prices.
There is enough production that the off/even days to purchase gas will not reappear.
That was caused not by a real shortage, but by government regulations and insane price controls.
If the oil industry had decent regulations we would have cheap gas and the oil companies would be able to sell overseas with government manipulation.
Cheaper at least, cheap means different numbers to different people.
I’ m going to lay my bets on “what is a manufactured fall in production to cause higher oil prices, Alex”
I worked in middle east oilfield years ago. They only folks I knew then that spoke Arabic past a few words were folks that were many years in construction over there.
In more recent times, I've been interviewed for work in Saudi, and still today get job inquiries to return to the Middle East. Speaking anything beyond Engish was never even brought up. They conduct most of their business in English.
Outside of work directly in the Middle East, Arabic for the oil industry is never mentioned. I've been in the industry over a couple decades.
That was caused not by a real shortage, but by government regulations and insane price controls.
Don’t forget that OPEC cut production to teach Carter a lesson that Carter was not in charge. Some think that when Nixon sold the Gold reserves that he made a deal with Saudi Arabia that crude oil would work to replace Gold and that Crude oil would be paid for in Dollars to prop up the dollar.
Thank You! I have reviewed the press comments by HISD as well as comments in the Leader in our neighborhood and they keep pushing that point. I thought if I could find a website or newspaper want ads to show that Arabic was not required it would help us as we fight this.
http://www.stopthemagnet.com/blog/houston-isd-multicultural-caliphate
In my mind, although painful at present, this is the best possible long-term scenario for the shale industry.
I have always found adversity makes for a stronger person, be it individually or for a company.
The downturn causes the industry to focus on the very best and optimum methods of development that will make money, and discard those that do not.
Watch how prodigious the next shale drilling in terms of profit will be once price escalates once again.
The best companies(like Pioneer or EOG) is where one will want to place your money.
You think folks are going to continue invest significant money into areas that cost more money to produce, than can be made in profit?
There are certainly areas that will continue to drill new wells, but far fewer wells than they would at $100.
The catch with the tight field formations like Bakken, Eagle Ford, etc is the fast drop off rate in production. If you don't keep drilling new wells, total production falls. These areas have been the source of our oil production gains over the last few years.
A tiny cut that afterwards, even OPEC admitted was insignificant. And it was Nixon, not Carter that created the rules mess that lead to gasoline lines other problems in 1973~74.
http://instituteforenergyresearch.org/analysis/forty-years-after-the-oil-embargo/
And one other thing: the article talks about shale drilling but is really about oil shale drilling, not gas shale.
Gas shale went through several years ago what oil drilling is going through today, i.e. - price declines and laying down of rigs.
At present, gas shale drilling remains robust, but only in the better places to drill like Marcellus, and in its best areas.
Gas prices have remained fairly depressed for years, and there is not really any large kickup seen in the foreseeable future.
Yet the industry will remain active in gas shale drilling as it tweeks the formula to get more gas out at lower capital and identify where the best places are to do so.
English is the universal language.
Many years ago I thought Japanese would be required and went about learning it.
That didn’t work out either.
Robust seems an odd description of the rigs drilling for gas given the numbers.
What greatly helped the drilling industry with the fall of gas drilling was the rise in oil drilling in the US. That type of switch is not happening again today.
I remember the lines and news stores though I was not really effected much. Carter was incompetent to do anything.
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