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.

Permitting in ND EIA

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.

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