In the coming month, the U.S.’s seven major shale plays will produce a cumulative 80.7 billion cubic feet (Bcf) of natural gas, the first time shale production has passed that milestone. Yesterday our favorite government agency, the U.S. Energy Information Administration, issued our favorite monthly report, the Drilling Productivity Report. The DPR is a forecast of oil and gas production in the country’s major shale plays for the coming month, made by the expert number crunchers at EIA. The Marcellus/Utica is forecast to increase production an amazing 1/3 Bcf in the next 30 days, for a second month in a row.
The Marcellus/Utica will produce 32.1 Bcf/d of gas, representing 40% of all the gas produced by shale plays. The Haynesville (in Louisiana) will up its production by 287 million cubic feet per day (MMcf/d) next month, and the mighty Permian oil play will increase gas production by 241 MMcf/d.
When you add the output from all plays together, next month marks the 30th consecutive month natural gas production has increased in America’s shale plays. Stupendous!
Our Three Favorite Charts
Below are the three charts the EIA doesn’t include in the official PDF of the report (for whatever reason). We think these are the three best charts they issue each month. Note to EIA: these charts need to be in the PDF!
You may notice in the third chart above showing DUCs (Drilled but UnCompleted wells), that overall the number of DUCs is decreasing–a lot. That means instead of drilling new wells, drillers are going back and completing already-drilled wells by fracking them and hooking them up to production. Last month EIA estimated that March would have 8,500 DUCs. It actually turned out to be 8,433. And April, once the numbers shake out, is forecast to be 8,390. This confirms our observation that drillers are spending less to drill less, yet production is rising because they can complete previously drilled wells.
May DPR (with June numbers)
Below is a copy of the full, official May 2019 DPR, which estimates production volumes for the coming month of June 2019. Note that as actual numbers roll in, EIA updates the numbers from previous monthly reports, as they have done with this one. The May numbers in this report are tweaked from last month.
Reuters analysis of the numbers, beginning with the oil numbers:
U.S. oil output from seven major shale formations is expected to rise by about 83,000 barrels per day (bpd) in June to a fresh peak of about 8.49 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday.
One of the largest changes is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 56,000 bpd to a new record of about 4.17 million bpd in June. That would be the biggest increase since February.
In North Dakota’s Bakken region, production is expected to jump by 16,000 bpd to a record of 1.42 million bpd while in the Eagle Ford, output is expected to slide by about 942 bpd to 1.43 million bpd.
A shale revolution and production increases particularly from the Permian basin and the Bakken have helped make the United States the biggest oil producer in the world, ahead of Saudi Arabia and Russia.
Major oil companies like Exxon Mobil Corp and Chevron Corp are boosting their presence in shale, particularly in the Permian, the largest U.S. shale oil field.
Separately, U.S. natural gas output was projected to increase to a record 80.7 billion cubic feet per day (bcfd) in June, the EIA said. That would be up 0.9 bcfd over the May forecast and mark a fifth consecutive monthly increase. A year ago in June, output was 68.2 bcfd.
The EIA projected gas output would increase in most of the big shale basins in June, except Anadarko in Oklahoma and Texas and Eagle Ford in Texas.
Output in the Appalachia region in Pennsylvania, Ohio and West Virginia, the nation’s biggest shale gas play, was set to rise almost 0.4 bcfd to a record 32.1 bcfd in June. Appalachia production was 27.5 bcfd in June a year ago.
The EIA said producers drilled 1,364 wells and completed 1,407, the most since January 2015, in the biggest shale basins in April, leaving total drilled but uncompleted wells down 43 at 8,390, according to data going back to December 2013.
That was the biggest decline in drilled but uncompleted wells since March 2018 when they fell by 104.*
*Reuters (May 13, 2019) – U.S. shale output to hit new record of 8.49 million bpd in June: EIA
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