2016: Texas sees largest drop, GOM sees largest gain
Average crude oil and natural gas production in the U.S. decreased in 2016, according to a note released today by the EIA. 2016 average crude production fell 6.1% to 8.39 MMBOPD, reaching bottom in September at 8.1 MMBOPD. Natural gas production was down to 80.39 Bcf/d, 1.3% below 2015 levels.
Very low commodity prices in early 2016 did much to drive production down. Crude oil prices reached a monthly low in February, at $30/bbl. Natural gas prices bottomed out in March, dipping to $1.73/MMBTU.
Source: EIA
Texas endures largest decrease, GOM shows an increase
Texas oil production saw the largest decrease in the country at 239 MBOPD, despite gains from the Permian.
Production in North Dakota also decreased significantly, by 139 MBOPD in 2016. The Federal Offshore Pacific region saw the largest relative decrease, though, dropping by 44% in part due to pipeline disruption in May. These decreases were somewhat offset by increases in GOM, where production increased by 96 MBOPD as new projects came online.
Source: EIA
The Marcellus saw the largest increase in natural gas production, with Pennsylvania, Ohio, and West Virginia all showing significant growth. Production in these three states increased by a combined 2.6 Bcf/d, driven by continued efficiency improvements in drilling and completion techniques. Texas, however, saw the largest decrease in natural gas production, dropping by 1.9 Bcf/d in 2016.
Source: EIA
Production expected to rise in 2017; EIA sees prices for both commodities going up
While production decreased in 2016, that is not likely to be the case in 2017. Money has poured into the Permian basin, as many E&P companies buy in and ramp up operations. This increase is not likely to be hampered by a decrease in prices, as the EIA predicts that both natural gas and crude oil prices will rise over the next two years.
WTI prices are expected to average $54/bbl in 2017, rising to $56/bbl in 2018. Henry Hub prices will average $3.03/MMBTU in 2017 and $3.45/MMBTU in 2018, the agency predicts.
