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Page added on April 7, 2015
Oil production to decline 0.7 to 8 percent
The Federal Reserve Bank of Kansas City today forecasted that domestic oil production could fall by as much as 8 percent in 2015.
The central bank said oil and gas production has increased by more than 50 percent since 2005, but things could be sliding backward with low prices.
“With oil prices at about half their summer 2014 level, will the investment continue to be profitable and boost production?” asked Nida Çakır Melek, an economist in the Regional Affairs Department for the Kansas City Fed.
The answer, she said, probably lies in the rig count.
“Despite highly productive new wells and an increase in the number of wells drilled per rig, U.S. oil production could decline from 0.7 to 8 percent in 2015, due in part to the significant decline in rig counts and depletion in existing wells,” she said.
The rig count is faltering, too. According to Baker-Hughes – the de facto source of rotary rig counts since 1944, rigs are quickly dropping off the map. Just between March 27 and April 2, the U.S. lost 20 rigs to settle at 1,028. Year-over-year, the U.S. has lost more than 43 percent of all its rigs.
Meanwhile, Wyoming has been dropping even faster. In just the past three months, the state dropped from 56 rigs to 28 rigs – a full 50 percent decline.
“For production to increase in 2015, rig efficiency and initial well production would need to increase markedly or the decline in rig counts would need to halt,” Melek said in her 19-page report.
4 Comments on "Oil production to decline 0.7 to 8 percent"
BobInget on Tue, 7th Apr 2015 10:03 pm
The next question should be:
Where on earth will the US find imports to replace that missing eight percent?
Not to mention the seen million barrels we currently imported.
BobInget on Tue, 7th Apr 2015 10:48 pm
Saudi Arabia Breaks records for production.
http://www.theguardian.com/business/2015/apr/08/saudi-arabia-boosts-crude-oil-production-to-highest-level-on-record
“Starve Yemen, feed a fever.”
Reuters
Tuesday 7 April 2015 19.40 EDT Last modified on Tuesday 7 April 2015 19.58 EDT
Saudi Arabia has revved up crude production to its highest rate on record, feeding unexpectedly strong demand from foreign refiners and increased capacity at home.
The oil minister, Ali al-Naimi, said on Tuesday the country produced 10.3m barrels per day (bpd) of crude in March, a figure that would eclipse its previous recent peak of 10.2m bpd in August 2013, according to records going back to the early 1980s.
A few weeks ago Naimi pegged production at about 10m bdp, 350,000 bpd above what Saudi Arabia said it pumped in February. The kingdom produces more than 10% of the world’s crude.
BobInget on Tue, 7th Apr 2015 10:53 pm
Of course stressing oil wells this hard will do harm.
WTFDIK :
Any opinions here on what must also be record water flooding?
shortonoil on Wed, 8th Apr 2015 9:06 am
Rig counts have fallen significantly in the shale plays, but uncompleted well inventory is still high. To complete the wells already drilled, if no new wells were being created, would require at least 5 months. That would be at a rate that would keep production flat. We don’t expect to see any significant decline in US production until 2016 when the backlog has finally been used.
As shale is a zero, to low, net energy source its production creates an equal amount of demand. That is, as production falls so also will demand for petroleum. Inventories will generally remain elevated, and prices depressed:
http://www.thehillsgroup.org/depletion2_022.htm
This will continue to keep pressure on high cost producers, and they will be phased out. High cost producers include bitumen, ultra deep water, and high sulfur extra heavy. This will also keep all oil producers’ profits at a minimum, and E&D expenditures will continue to fall. Reserves will not be replaced as they are depleted.
As petroleum’s ability to power the non energy goods sector of the economy falls, so also will the demand for petroleum. As it is one of the world’s largest industries, its decline will have a far reaching impact on the world’s economy.
http://www.thehillsgroup.org