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IEA: Sharp Fall in US Crude Production After 2015 Peak

IEA: Sharp Fall in US Crude Production After 2015 PeakIEA: Sharp Fall in US Crude Production After 2015 Peak

Oil production in the nation’s lower 48 states has dropped by 800,000 barrels a day in the 12 months after it peaked, one of the biggest reasons why the world’s oil glut has eased.

A dramatic surge in oil drilling and fracking across Texas and North Dakota pushed production outside of Alaska and the Gulf of Mexico to a peak of 7.6 million barrels a day in April 2015. But by this April, the production had fallen to 6.8 million barrels a day, the Energy Information Administration said in a monthly report, FuelFix reported.

“It’s gone a long way to help out the oil market,” said R.T. Dukes, an analyst at energy research firm Wood Mackenzie, which believes continental US oil production will fall to 6.4 million barrels a day over the next year or so.

Though crude prices have risen near $50 a barrel and more drillers have become active in the oil patch again, it is probably too late to reverse the decline in production, Dukes said.

“Even if you’re putting a rig back to work today, it’s not adding regular wells for four to six months. The decisions made today affect production next year.”

The decline in onshore US production has been somewhat masked by the Gulf of Mexico, where output has held fairly steady and even risen in some months since the downturn in energy prices began two years ago.

But the relative stability of prices in recent weeks has spurred shale producers to resume production. Shale drillers brought back the most oil rigs of any week this year as confidence in a stabilized market is prompting talk of expansion throughout 2016.

Rigs targeting crude in the US rose by 11 to 341, after 7 were dropped two weeks ago, Baker Hughes Inc. said on its website.

It marks the fourth time in the past five weeks that producers have added oil rigs. Explorers in the Permian basin of West Texas, the nation’s busiest oil patch, again led the activity climb by adding four for a total of 154 oil rigs working in the region.

Financialtribune.com