US Unconventional Crude Oil Production Holds Steady in February, Natural Gas Output Moderately Declines
In its latest update on January 16, the US Energy Information Administration (EIA) reported that unconventional crude oil production in the United States is anticipated to remain nearly unchanged in February for the third consecutive month, experiencing a marginal decline of 2,000 barrels per day (b/d) to reach 9.68 million b/d. This stability is observed amid fluctuating domestic rig counts, which have maintained relatively steady or slightly lower levels.
Additionally, data from the EIA’s monthly Drilling Productivity Report reveals a slight dip in natural gas output, down by 187,000 thousand cubic feet per day (Mcf/d) in February to 98.889 billion cubic feet per day (Bcf/d).
The month-on-month decreases for both oil and gas are notably smaller than earlier projections by the agency, which foresaw potential declines of up to 40,000-50,000 b/d for oil and 300,000-400,000 Mcf/d for natural gas.
Josef Lieskovsky, the EIA upstream senior analyst and author of the DPR report, emphasized that increased productivity in key regions such as the Permian, Appalachia, and Haynesville has been a pivotal factor in the recent months’ performance.
“The most significant part of the difference between the last couple of months and the most recent one has been the higher revision in Permian productivity,” stated Lieskovsky.
Among the seven unconventional basins tracked by the DPR, changes in output from month to month were minimal. The only notable increase in February is expected in the Permian Basin, the largest among US basins, with oil production projected to rise by 5,000 b/d to 5.974 million b/d, and gas output to increase by 122,000 Mcf/d to 24.4 Bcf/d.
Conversely, oil output in the Bakken, Niobrara, and Anadarko plays are each forecasted to decrease by 1,000 b/d, with respective production levels at 1.303 million b/d, 689,000 b/d, and 391,000 b/d. The Eagle Ford Shale is anticipated to see a 2,000 b/d decline in oil production, reaching 1.147 million b/d.
Most gas-focused basins are predicted to experience output losses, with Appalachia facing the largest drop in February, down by 159,000 Mcf/d to 35.48 Bcf/d. The Haynesville is expected to be the second-highest in losses, down by 88,000 Mcf/d to 16.3 Bcf/d, followed by the Eagle Ford Shale, with a decrease of 46,000 Mcf/d to 7.221 Bcf/d, and the Anadarko Basin, down by 27,000 Mcf/d to 6.667 Bcf/d.
The Bakken Shale and the Niobrara, however, are likely to witness higher gas output, with the Bakken potentially rising by about 10,000 Mcf/d to 3.489 Bcf/d, and the Niobrara seeing a gain of 1,000 Mcf/d to 5.339 Bcf/d.
Notably, the severe Arctic weather event affecting the US, including Texas, has not been factored into the EIA’s estimates. The agency stated it would capture any drops in production due to severely cold weather in future editions of DPR reports.
The data from the DPR is primarily based on rig counts, which have remained relatively stable in recent months. From mid-August to mid-November, rig counts hovered around 700, but they have since declined by nearly 30 rigs. As of the week ending January 3, the rig count was 673, down four for the week.
Moreover, drilled but uncompleted (DUC) well counts have continued to decrease. In December, there were 4,378 DUCs spread across the seven unconventional basins, representing a decline of 64 compared to the previous month. While this is less than the drop recorded from October to November, it indicates an ongoing trend of decreasing DUCs.
Completing the picture, completions have slowed down in recent months, especially in the Permian. Lieskovsky noted that the Eagle Ford has experienced the lowest number of completions in the last five weeks, a trend he attributed to the lingering impacts of COVID-19.