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World Oil Supply

OPEC Monthly Oil Market Report – August 2017

45

Table 5 - 4: US liquids production breakdown

Onshore crude oil output

in the US “Lower 48” increased in May after five consecutive months of growth by

73 tb/d to average 7.0 mb/d, according to the EIA’s monthly crude oil production data. This shows that the

onshore crude oil output in the “Lower 48” increased by 481 tb/d mostly in the prolific shale regions. This is in

contrast to December 2016 when it was at its lowest level of 6.52 mb/d. The tentative tight crude production

in May 2017 was at 4.56 mb/d, up 324 tb/d y-o-y, higher by 0.42 mb/d than the bottom in September 2016.

Nevertheless, comparing the five-month average output of onshore Lower 48 states in 2017 of 6.83 mb/d

with the annual 2016 average output indicates weak growth of only 67 tb/d. This disappointing result is due

to the lower-than-previously expected oil prices despite the expectation of an average of $55/b, which is the

reliable breakeven for US shale producers. Most of them will be unable to break even within the current

environment. Many companies did not manage to do so in the first quarter, when oil prices were about 8%

higher compared with the second quarter of the year. New well productivity in most regions is in decline or

more or less steady. For example, in Permian and Eagle Ford, new well productivity declined by 65 b/d and

41 b/d to 597 b/d and 1,410 b/d, respectively.

Graph 5 - 9: US monthly liquids production breakdown

In April 2017, some 957 wells were drilled by operators in the US, of which 713 wells were completed. In the

Permian, out of 434 wells drilled, 255 wells were completed, while in Eagle Ford 123 wells were completed

and 49 wells remained uncompleted. In Bakken, the completed wells’ count in April was higher than the

drilled wells, 88 wells versus 81 drilled wells. There were 5,641 drilled uncompleted wells (DUCs) in April,

761 uncompleted wells more than the lowest level in November 2016. This amounted to just 138 more

uncompleted wells compared to April 2016. By the end of April 2017, the number of DUCs in the Permian,

Eagle Ford and Bakken reached 1,939, 1,312 and 798, respectively. According to the EIA’s DPR

(Drilling Productivity Report) the total number of DUCs in June 2017 reached 6,031 most of which were in

the Permian with 2,244. The growing backlog of Permian DUCs means current price levels are unlikely to

stop production growth in the Permian over the next 12 months.

Change

Change

Change

2015

2016 2016/15

2017* 2017/16

2018* 2018/17

Tight crude

4,582

4,263

-319

4,750

487

5,369

619

Gulf of Mexico crude

1,515

1,598

83

1,684

86

1,749

65

Conventional crude oil

3,311

2,989

-322

2,860

-129

2,726

-134

Unconventional NGLs

2,347

2,538

191

2,712

174

2,913

201

Conventional NGLs

995

940

-55

1,014

74

1,080

66

Biofuels + Other liquids

1,283

1,268

-15

1,272

4

1,292

20

US total supply

14,034 13,596

-438 14,292

696 15,129

837

Note: * 2017 and 2018 = Forecast.

Sources: Energy Information Administration, Rystad Energy and OPEC Secretariat.

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018*

mb/d

Conventional crude oil

Gulf of Mexico crude

Conventional NGLs

Biofuels + Other liquids

Tight crude

Unconventional NGLs

Note: * 2017 and 2018 = Forecast.

Sources: Energy Information Administration, Rystad Energy and OPEC Secretariat.

Conventional

sources

Unconventional

sources