In response to continued low oil prices, onshore crude oil production in the Lower 48 states is expected to decline from an average of 7.41 million bpd in 2015 to 6.46 million bpd in 2016 and to 5.76 million bpd in 2017. Increased production from the federal Gulf of Mexico (GoM) is not enough to offset those declines, with total projected US production falling from 9.43 million bpd in 2015 to 8.04 million bpd in 2017.
The sharp decline in oil prices since the fourth quarter of 2014 has had a significant effect on drilling in the United States. The number of active onshore drilling rigs in the Lower 48 states fell 78% (from 1876 to 412) between the weeks ending on October 31, 2014, and April 15, 2016, according to data from Baker Hughes. The decline in active rigs and well completions is projected to result in month-over-month onshore oil production declines of 120 000 bpd through September 2016.
Market expectations of uncertainty in the crude oil price outlook continue to be high, as reflected in the current values of futures and options contracts. In EIA's April Short-Term Energy Outlook (STEO), the 95% confidence interval for market expectations for prices in December 2017 is relatively wide, with upper and lower limits of US$20/bbl and US$100/bbl, respectively. EIA's April STEO forecasts Brent crude oil prices averaging US$35/bbl in 2016 and US$41/bbl in 2017, with the December 2017 price averaging US$45/bbl.
EIA projects that the number of operating rigs in the Lower 48 states will continue to decrease through mid-2016 before beginning to slowly increase. However, expected Lower 48 production will continue to decline - although at a slowing rate - throughout 2017.
In contrast to the forecast of declining Lower 48 onshore production through 2017, federal Gulf of Mexico oil production is projected to increase from 1.54 million bpd in 2015 to 1.66 million bpd and to 1.82 million bpd in 2016 and 2017, respectively. Alaska's oil production is projected to slightly decrease from 0.48 million b/d in 2015 to 0.47 million bpd in 2016 and to 0.46 million bpd in 2017.
This story was originally published here.
Adapted from a press release by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/20042016/eia-expected-drop-in-lower-48-oil-production-offset-by-rising-gom-output/