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Natural gas production across all major shale regions in EIA's Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells. The DPR provides a month-ahead forecast of natural gas and crude oil production for the seven most significant shale formations in the United States. In order to estimate...

Crude oil production in September from seven major US shale plays is expected to decline 93,000 b/d to 5.27 million b/d, according to the US Energy Information Administration’s latest Drilling Productivity Report (DPR). EIA previously projected 91,000-b/d declines for both July and August (OGJ Online, June 9, 2015; July 13, 2015). The DPR focuses on the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica, which altogether accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. The Eagle Ford continues to represent a bulk of the overall oil output declines, projected to...

Saudi Arabia has long enjoyed the status of being the top crude oil exporter in the world. With record production of 10.564 million barrels per day in June 2015, Saudi Arabia has been one of the major driving forces behind the current oil price slump. The Saudis have kept their production levels high since last year in order to drive other players (especially U.S. shale drillers) out of business. Equally clear is the fact that this strategy of maintaining the glut and driving out rivals hasn’t worked so far. Even when we look at the refining sector, we see that...

Tuesday was a busy announcement day for the US independent E&Ps. After processing Pioneer Natural Resources' plans to ramp production on a $90-oil-price growth trajectory (see our take here), the operational updates released by Devon, Oasis and Cimarex sounded like an echo. Each of these three are also planning for production expansion in spite of oil price weakness. Several times in the past couple months, we've noted the grit of the independents showing up in the one-off datapoint or the operations outlook. This week, we are hit with a flood of new evidence that the US independents are shirking their...

The CEO of Anadarko Petroleum Corp. says it’s still unclear when his company should go back into growth mode across U.S. shale plays. And that’s not necessarily because of volatility in the oil market, but rather because oil field service companies haven’t cut prices for equipment and other work deep enough yet. “Even with a tremendous amount of hardship that service providers have gone through in the first half of the year, we as an upstream company still don’t have the margins we had a year ago,” Anadarko CEO Al Walker said in a conference call with investors Wednesday. Analysts...

The plunge in oil prices last year led many to say that a decline in U.S. oil production wouldn't be far behind. This was because almost all the growth in U.S. production in recent years had come from high-cost tight oil deposits which could not be profitable at these new lower oil prices. These wells were also known to have production declines that averaged 40 percent per year. Overall U.S. production, however, confounded the conventional logic and continued to rise--until early June when it stalled and then dropped slightly. Anyone who understood that U.S. drillers in shale plays had large...

...“The EIA has global oil demand in 2020 and beyond being met with increased supplies from a region of the world stuck in a multi-decade crisis that is likely to get much worse before it ever gets better. Supply from the short-cycle U.S. oil market is required to balance the global crude market at a rate where U.S. shale should remain a growth industry.”... There have been several key developments that set the stage for the evolutionary phase that the world has now entered: 1) development of mature fracking technologies for oil and gas shale that have made previously uneconomic...

Shale reservoirs have become an important part of North American oil and gas supply and their development has begun a new era of oil and gas production worldwide. Advances in well drilling and completion technologies supported the rapid development of shale resources which contributed to the almost overwhelming success of U.S. shale in recent years. Globally, Argentina’s Neuquén Basin and China’s Sichuan Basin are the two front-runners to emulate the successes of the United States, with Poland, Algeria, Australia, Colombia, Russia, and Mexico still in earlier phases of exploration and evaluation, while Saudi Arabia also has plans for domestic shale...

What OPEC countries fear most is a follow-up technological revolution that will lead to a second oil boom in the U.S., and that fear is now being realized. A technological revolution spurred the U.S. oil boom that resulted in the greatest increase in domestic oil production in a century, and while that has stuttered in the face of a major oil price slump and an OPEC campaign to maintain a grip on market share, the American response could be another technological revolution that demonstrates that the first one was merely an impressive embryonic experiment. It’s not only about shale now—it’s...

The oil price collapse of 2014-2015 began one year ago this month (Figure 1). The world crossed a boundary in which prices are not only lower now but will probably remain lower for some time. It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing laws are different.* For oil prices, the phase change was caused mostly by the growth of a new source of supply from unconventional, expensive oil. Expensive oil made sense only because of the longest period ever of high oil prices in...

With petroleum prices down 50 percent over the past year, many analysts and pundits are predicting the end of America’s shale oil boom. Recent headlines include: “Oil Price Fall Forces North Dakota to Consider Austerity” (New York Times);[1] “Oil Price Drop Hurts Spending on Business Investments” (Wall Street Journal);[2] “The American Oil Boom Won’t Last Long at $65 per Barrel” (Bloomberg Business);[3] and “The Shale Oil Revolution Is in Danger” (Fortune)[4]. High prices, shale skeptics argue, created a bubble of activity in unsustainably expensive shale fields. As shale-related businesses contract, consolidate, and adjust to the new price regime, a major...

The oil markets could be about to enter another round of soft prices. The OPEC decision on June 5 to leave its collective target unchanged was widely expected. As a result, oil prices barely flinched. But there are other reasons to think that oil prices could see a bit of a downturn in the coming weeks. First, OPEC revealed in its latest monthly oil report that it is still producing well above its stated 30 million barrel per day target. Saudi Arabia’s output inched up another 25,000 barrels per day in May from the month before in a further sign...

The most recent Drilling Productivity Report from the U.S. Energy Information Administration reveals that the phased impact of lower oil prices on U.S. tight oil production growth, is finally starting to show up and is expected to increase in magnitude over the next couple of months. The agency estimates crude oil production from the seven key regions in the Lower 48 states to have declined by around 44,000 barrels per day, or 0.8% month-on-month in May, and expects the decline rate to increase to around 91,000 barrels per day, or 1.7% month-on-month by July of this year. According to the...

The connection between wastewater injection wells and an alarming increase in the frequency of earthquakes is getting a lot more scrutiny these days. First was Oklahoma, which has suddenly become the earthquake capital of the United States. The number of earthquakes with a magnitude of 3.0 or higher more than quadrupled between 2013 and 2014 in the state. The culprit? Scientists are becoming more confident that the injection of wastewater into disposal wells causes fault lines to “slip,” contributing to the likelihood of an earthquake. The issue has become highly contentious in Oklahoma. But now the controversy has spread to...

There will be no US-style shale gas revolution in Europe, the president of the International Gas Union (IGU) has told the BBC."You cannot duplicate [the US experience] in Europe," said Jerome Ferrier. "Politicians are hesitating to accept shale development." Abundant shale gas in the US has helped domestic energy prices fall. As a result some European governments, not least the UK, are keen to develop their own shale resources. Mr Ferrier's comments come a day after a number of major energy firms called for a working price of carbon. Carbon pricing The IGU president, talking to the BBC at the...

Adapting the technology that powered the shale oil boom in Texas to the deserts of Saudi Arabia and elsewhere could produce 141 billion barrels of crude, research firm IHS said Thursday. Horizontal drilling and hydraulic fracturing, alongside other technological breakthroughs in recent years, could pump that much oil out of 170 older, largely unproductive fields around the world, from the Middle East to Latin America to Russia. In its initial assessment, IHS found 96 percent of the oil that could be recovered from those fields would have to be released using hydraulic fracturing, a process of blasting water, sand and...

After slashing production for months, U.S. shale-oil companies say they are ready to bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices. Last week, EOG Resources Inc. said it would ramp up output if U.S. prices hold at recent levels, while Occidental Petroleum Corp. boosted planned production for the year. Other drillers said they would open the taps if U.S. benchmark West Texas Intermediate reaches $70 a barrel. WTI settled at $60.50 Wednesday, while global benchmark Brent settled at $66.81. An increase in U.S. production, coupled with rising...

Saudi Arabia continues to ratchet up production, taking market share away from U.S. shale producers. According to OPEC’s latest monthly oil report, Saudi Arabia boosted its oil output to 10.31 million barrels per day in April, a slight increase over the previous month’s total of 10.29 million barrels. That was enough for the de facto OPEC leader to claim its highest oil production level in more than three decades. Saudi Arabia has increased production by 700,000 barrels per day since the fourth quarter of 2014 in an effort maintain market share. The resulting crash in oil prices is forcing some...

Overseas competitors who were caught off-guard initially by rising US unconventional crude oil production have increased their own outputs now and can be expected to try and keep prices low to protect their global market shares, speakers at a May 12 Atlantic Council discussion said. That could make marginal US unconventional properties uneconomic, but won’t threaten the new US position as a major producing nation, they agreed. “We’re entering a phase when all the excess capacity will be resized to the new US world market share,” said Subash Chandra, managing director and senior equity analyst at Guggenheim Partners. “I don’t...

As a response to lower oil prices, E&P companies have guided considerable cuts in their 2015 investment budgets. Preliminary budgets indicate a ~20% drop in global E&P investments this year, with shale declining the most. Observing historical trends, Figure 1 shows global investments for offshore and shale oil and gas. During the past decade, offshore investments have increased from ~ US$150 billion in 2005 to ~ US$360 billion in 2014. The growth in offshore investments is a combination of higher activity and higher unit costs (i.e., rig rates). Also over the last 10 years, shale activity accelerated as horizontal hydraulic...