Low oil prices won’t keep production from growing half a million barrels a day next year according to the EIA
Crude production in the U.S. is expected to increase by 0.7 MMBOPD in 2015 despite low commodity prices, according to the Energy Information Administration’s (EIA) Drilling Productivity Report (DPR).
The EIA and North Dakota’s Department of Mineral Resources (DMR) evaluated indicators like permits, rig movement and spuds in order to gain an insight on production trends in North Dakota, home of the Williston Basin. Based on the most recent data released by North Dakota’s DMR, drilling and production activities in the state have not slowed, despite significant decline in domestic crude oil prices since July 2014. Oil production in September 2014 – the latest data available – rose 5% from the prior month.
The number of permits issued in October 2014 was 28% above the September level, but it dropped 30% in November. However, when normalized based on the number of business days during those months, October is only 17% above September’s level, and November is only 10% lower than October.
Looking forward, EIA expects 2015 drilling activity to decline as a result of less-attractive economic returns in some areas of both emerging and mature oil production regions. Many companies will redirect investment away from exploration and research drilling and into core areas of major tight oil plays. However, projected oil prices remain high enough to support development drilling activity in the Bakken, Eagle Ford, Niobrara and Permian Basin, which contribute the majority of U.S. oil production growth, reports the administration.
The EIA estimates U.S. crude oil production to average 9.3 MMBOPD in 2015, up 0.7 MMBOPD from 2014, but down from expected growth of 0.9 MMBOPD in last month’s Short-Term Energy Outlook. However, all of the decrease in forecast production growth comes in the second half of 2015. EIA revised production growth downward by 0.14 MMBOPD and 0.27 MMBOPD in the third and fourth quarters, respectively, compared with the previous forecast.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.