United States onshore oil production is expected to gradually decline in late 2020, after peaking in August, Rystad Energy reported on Wednesday.
That is because drilling is lagging as the United States recovers from the coronavirus pandemic and resulting lower demand and lower prices, it said.
“Onshore drilling remains below the level required to maintain production in nearly all U.S. oil basins,” Rystad Energy said.
That is happening, despite many producers completing wells that were drilled but uncompleted, it said.
Rystad Energy is projecting that U.S. onshore production will increase again in the second half of 2021.
U.S. oil production is about 11 million barrels per day and natural gas production is about 90 billion cubic feet per day.
Production has grown in July and August in multiple U.S. oil basins as curtailments have largely ended and wells are again being drilled, it said.
There were about 650 fracking operations that were started in September in the Permian Basin of West Texas and New Mexico.
“We still anticipate U.S. oil output to average 10.82 million bpd in 2021,” said Rystad Energy’s Artem Abramov in a statement.
“The outlook for the Lower 48 states excluding the Gulf of Mexico has been revised up by 90,000 bpd for the second half of next year, as we start hearing about modest increases in the oil rig count before the end of the year,” he said.
That uptick will be limited to a few producers without significant DUC inventory size, Rystad Energy said.
Most operators with large DUC inventories are planning to increase rig activity in the first half of 2021 for a smooth transition to normal operations, it said.
It has also revised its dry gas production for 2021 up by about 500 MMcfd. But the U.S. domestic gas market is likely headed toward what Rystad Energy called “a structural supply deficit with the possibility of stronger domestic gas prices if the global gas market recovers further.”
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