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Page added on January 2, 2015
US Expected To Increase Oil Production In 2015 Despite Declining Oil Prices
Oil prices continue to fall, but don’t expect the U.S. to curtail its production in 2015. In fact, a recentreport from the U.S. Energy Information Administration suggests that U.S. oil production will grow in 2015.
Through an analysis of oil permits, rig movement and the groundbreaking of new drilling projects, known as spudding, in North Dakota, a state that is home to some of the most active production fields in the country, the EIA’s “Drilling Productivity Report” found that U.S. oil production should continue to increase in 2015. The agency is expecting U.S. crude oil production to average 9.3 million barrels per day (bbl/d) in 2015, which would be an increase of 0.7 million bbl/d from 2014, but down from expected growth of 0.9 million bbl/d in last month’s Short-Term Energy Outlook.
The survey noted that the EIA expects drilling activity to decline because of “less-attractive economic returns in some areas of both emerging and mature oil production regions.” Adding that “indicators tracked by [the report] and North Dakota’s Department of Mineral Resources (DMR) cover much of the exploration and production process, from planning to production.”
The price of crude oil plunged in 2014 and the losses have already crept into the nascent new year as Brent crude traded below $56 a barrel early Friday, erasing previous gains. That price represented another new record low price for oil since 2009.
Even as prices continue to dip, top oil exporters around the globe have announced their intentions to continue production. Saudi Arabia said in December that it wouldn’t cut production in the face of fast-growing U.S. shale oil output. Other top producers, including OPEC members, like Iraq announced intentions to follow suit and continue current levels of production.
“Nothing has changed on the supply side. Unless there are some supply cuts, oil markets can’t be strong at the moment,” Ken Hasegawa, commodity sales manager at Tokyo’s Newedge Japan, told Reuters.
Another top analyst told the wire service that low oil prices are likely the new normal, at least for the foreseeable future.
“With no production cuts in the offing and a significant demand response years away, oversupply looks to be with us for a while,” RBN Energy analyst Rusty Braziel said in a note. “$100 a barrel crude oil prices are in the rear view mirror, at least for a couple of years.”
27 Comments on "US Expected To Increase Oil Production In 2015 Despite Declining Oil Prices"
J-Gav on Fri, 2nd Jan 2015 4:20 pm
Hee-hee-ha-ha. Somebody needs a gaping new asshole torn out for them – but I’m not letting on as to who … oh no! That’s not my job.
Northwest Resident on Fri, 2nd Jan 2015 4:46 pm
This is what they want investors and stock market traders to believe, no doubt. You can’t blame them for trying to say and/or do whatever they have to do in order to keep it all duct-taped and bubble-gummed together with lies and propaganda and other assorted tricks. Those of us in-the-known can get a good laugh out of this article, but never forget that it is everybody’s best interested to keep as many people in their “all is well” state of mind for as long as possible. Inducing the masses to believe that we’ll still keep pumping more oil despite crashing prices is a lie that must be told to calm the nervous herds. But yeah, like J-Gav says, the premise of this article is a real laugher when stacked up against the actual cold hard truth.
rockman on Fri, 2nd Jan 2015 5:07 pm
“Through an analysis of oil permits,…”. Oil permits are no guarantee the well will be drilled. Given the typical months it can take to get a permit issued many of the current permit inventory was initiated before the price slide.
“…rig movement and the groundbreaking of new drilling projects, known as spudding…”. Actually I have no idea what they’re trying to imply. Rigs move: some times to a new drill site and sometimes to the yards where they are “stacked” waiting for the next job. And when a well “spuds” it means it begins drilling. Doesn’t matter how many rigs spud this month because it’s not proof the same number of wells will spud next month. There is a carryover factor: sometimes it makes more sense to drill a marginal well then pay a penalty if the rig is on long term contract. But there can come a point when a company will: when NG prices collapsed at the end of ’08 Devon paid a total of $40 million to cancel 14 rig contracts they had running in the Haynesville Shale.
I’m keeping an eye out thru the drilling contractors for such plugs being pulled in the Eagle Ford play.
Speculawyer on Fri, 2nd Jan 2015 5:28 pm
There is a lot of momentum in the system. You can’t just instantly cancel a drilling rig contract. And a lot of drillers are protected right now due to oil futures contracts such that the market prices are not directly hitting them yet. So I won’t be surprised if production does increase for a little while.
But a lot of companies have been letting people go and scaling back investment plans. So production is going plateau and go down a bit in the USA unless the oil price recovers. $52/barrel is just not gonna attract investment.
Apneaman on Fri, 2nd Jan 2015 5:42 pm
Of course there will be more fracking since Obama did another end around on the Democratic faithful. He used the NDAA of 2015 as the back door…again. Anything for the defense of the Homeland kids. All Hail Shale! Freedom Fracking!
The Pentagons’ spending bill approved at the end of last year in the calls for expediting permits for fracking in public lands explains Steve Horn from DeSmogBlog – January 2, 15 (Video and transcript)
http://therealnews.com/t2/index.php?option=com_content&task=view&id=767&Itemid=74&jumival=12911
Makati1 on Fri, 2nd Jan 2015 7:01 pm
Looks like the oily limbo bar will be dropped closer to the bankruptcy levels than originally thought. Russia also increased their production and will probably try to do so again in 2015.
Pump baby pump! Collapse the world economy and we can reset and start at a much lower level. One that eliminates the title ‘First World’ for any country, forever.
rockman on Fri, 2nd Jan 2015 8:13 pm
“You can’t just instantly cancel a drilling rig contract”. As I said you can instantly cancel a rig contract…even after it begins drilling hole. Like I said: Devon instantly cancelled 14 out of 18 rigs drilling the Haynesville Shale in ’09. And paid $40 million in penalties.
Been doing this for 40 years and have not seen momentum carry projects forward. I was saw $600 million of budgeted drilling projects cancelled in a 30 minute board meeting. It’s very hardnosed and cold blooded. Back in the 80’s bust a company pulled all the employees into the conference room on a Friday afternoon and announced the entire staff was terminated that day. Some asked about the termination package. This is true: got it directly from one of that staff: manager said that the decided to shut the company down two weeks ago and was going to thus consider their paychecks for the last two weeks as their severance package.
I don’t know how it has worked in other industries but I’ve watched a number of scale back phases in the last 40 years. Always the same: no quarter…no mercy.
I knew a Texaco hand in the research division many years ago. They were given no hint: on a Friday afternoon private security guards went to about 2/3 of the offices, handed them a termination notices, let them pick up only their coats and brief cases and walked them to the sidewalk. Their were some who had car pooled and had to call family or friends to give them a home. Wouldn’t even let them make a phone call from the building. Pre-cell phone days. Had to go to the gas station on the corner to call wife and say they were just fired. The irony: it was a Texaco gas station.
No thanks…no good luck. Just hit the road and don’t let the door hit you in the ass. Even worse for field workers: get s phone call on days off: you don’t fire someone while they are handling $millions of equipment easily damaged.
Apneaman on Fri, 2nd Jan 2015 9:20 pm
Any one interested in some depth on the Saudis.
Frontline – House Of Saud (PBS Documentary)
https://www.youtube.com/watch?v=H-HyrIAL5Bc
Industrial on Fri, 2nd Jan 2015 9:59 pm
BUILT FOR PEAK OIL…A LIVING FOSSIL OF THE INDUSTRIAL AGE.
Im just sitting here listening to mostly the end of the song (mind in a box-supremacy) on repeat imagining my future…it’s awesome and great but at times horrible like just unbearable…it’s like the year 5679 APO (after peak oil) im waking up from cryo storage on a cold table in a white room wearing a business suit…the last time i woke up i was peppered by space junk closing a faulty circuit outside the spaceship—so im not exactly happy about the current situation…a species of “evil” aliens with a technology radically different from ours is threatening the ship and no one is able to communicate with them…im followed by doctors into a room and there’s a core backup of my mind in the center console and all around is a library of “plug in” drives of technical information that i can access…but this time im walking towards a terminal in the corner of the room and i have to plug in and translate the radically different quantum computers of the alien species with my overclocked neural hardware…i plug in and after about 15 mins the computer monitors go dark and a single doctor eventually sees the smoke coming from my head and gently kicks me out of the chair..one of the doctors is eating a candy bar but most of them are just wondering about how much there next paycheck will be…some are complaining about the smell of burning plastic in the room-red hot liquid metal has flowed down onto my shoulder and before there was even time for it to cool–the alien species totally understood the human story…how giga-death happened in the early 21st century and the survivors had to use robots to mine the nuclear waste buried deep underground to reach an energy source capable of getting us off the planet…they see the images of the hubble deep field…the moon landing and the voyager craft that was destroyed by micrometeorites merely decades after it was launched from earth…there’s glitches in the data from the overclocking but overall an acceptable upload…
As a ghost in the room im thinking to myself (i must be slipping in my old age) because it looks like i might be learning “what hard work is”….i look down and see the hole burned through the floor,it’s kinda close to the hole i made last time this happened..i eventually say to myself “your just not thinking straight at the moment”
Im outside of my body so i see the doctors as they work on me and it looks more like nascar than it does a hospital scene but this is all just routine to them….then suddenly my HUD is powering up and just as suddenly,i see a blue screen and im gone again…someone used windows 7 when i specifically only use windows xp…even from the grave this person is now fired….i wake up again and there’s my future wife…she’s used to seeing what surviving peak oil did to me…the first thing she says is “look at what you did to the floor” 🙂
I modified my cellular chromosomes to survive peak oil when i was 23 and that was merely 6 years ago…
Speculawyer on Fri, 2nd Jan 2015 10:45 pm
Well sure . . . you can always break a contract and pay damages. Perhaps the deals have pre-negotiated liquidated damages clauses. But if they are starting to do that, then things are really desperate.
You’d think that finishing the well and selling the oil at a lower price would generally be better than paying a huge damage clause. But I guess if the price drops enough, you might as well pay the damages and fire all those expensive workers.
Wow those are some severe firings you describe, rock. I’d think that many of those practices would be illegal. But I guess in the land of “no regulations” Texas, you can do that sort of thing.
Keith_McClary on Sat, 3rd Jan 2015 12:00 am
These folks who are predicting prices will stay low for a couple of years … what were they predicting a year ago?
Perk Earl on Sat, 3rd Jan 2015 1:46 am
I expect to make more money than I receive this coming year.
I expect the frackers to up the ante to new heights making 2014 look like a loser compared to 2015.
I expect Putin to invite Obama for dinner at his Mother’s home in Moscow.
I expect my ford ranger to turn into a Tesla X model.
I expect the next rainfall to be pebbles of gold.
GregT on Sat, 3rd Jan 2015 2:54 am
“I’d think that many of those practices would be illegal. But I guess in the land of “no regulations” Texas, you can do that sort of thing.”
No different than any other company Spec. The bottom line is the bottom line. It’s just business, nothing personal.
Makati1 on Sat, 3rd Jan 2015 5:59 am
Predator Capitalism is boomeranging…
Dredd on Sat, 3rd Jan 2015 6:11 am
Petroleum Civilization needs to make some bucks to cover burial expenses.
rockman on Sat, 3rd Jan 2015 6:59 am
spec – Yes: termination clause in all drilling contracts. And yes: Texas is a “right to work state”…unions not required. Thus it’s also a right to terminate state with no severance required. Which is why us older hands include a severance package in our work contracts. Of course, if the company bankrupts that contract is typically worthless.
I suspect it’s equally brutal in most industries in downturns. But unless you’re an insider you don’t get much of the bloody details.
J-Gav on Sat, 3rd Jan 2015 7:48 am
Makati – You may be right when you say that “Predator capitalism is boomeranging.” But it’s a very good bet that the 1% will be doing all they can to side-step it and make sure the 99% takes the hit ..
rockman on Sat, 3rd Jan 2015 7:55 am
Spec – Just had a thought as to why oil patch depressions seem so much more brutal: can you think of any other industry that “crashes” as fast as we do?
Consider Detroit: it took decades for more efficient foreign auto makers to erode that commerce. But consider this: how fast would the remaining US auto industry crash if in the last 6 months, the cost of imported cars dropped 40%? How many US winter wheat farmers would be sitting down with bankruptcy layers this month if they anticipated a 40% lower price for their upcoming harvest?
Some analyst are predicting a minimum of a $2 BILLION decrease in Halliburton revenue in 2015. What will their board do to make up that difference so they can pacify the fund managers with the dividends they were promised as well as maintain loan payments? Easy: cut $2 BILLION from the budget. And their budget has two main components: new equipment and salaries. And they both need to be cut ASAP. Salaries cuts are easy when you don’t anticipate a need for those hands anyway. And what happens to the employees at Caterpillar when H cancels their order for $300 million of new turbines used on frac trucks?
At least in the oil patch “trickle down” is real. And it’s typically not a trickle but a flood. Consider hands with only high school degrees getting $80k/yr slinging dumb iron on the drill floor. When that job disappears what then: they apply with 20 others for 3 stocker jobs at the local Walmart? Last small downturn about 7 years ago on service company laid off 2000 hands in one day. And most lived in a relatively small geographic area. How do they move to another area where there are 2000 job openings even if those positions pay less then half of what they were making? Trickle down is great when booming. But when the crash comes that trickle can feel more like waterboarding. LOL.
The more I think about it the more unique the oil patch is with the velocity of our recessions. The closest comparison I can think of is the residential home construction. But they’ve never seen a 40% drop in new home prices occur over just 6 months.
rockman on Sat, 3rd Jan 2015 8:17 am
J-Gav – The 1% take a hit also. My billionaire owner just saw the gross revenue drop $5.8 million/year from just one of our wells. The obvious difference between him and a toolpusher that is about to lose his job is that my owner isn’t worried about making the mortgage payment on his McMansion because he paid cash for it. LOL.
What makes you think the 1% that just lost $billions in stock and reserve value don’t suffer financial degradation? But obviously MOST of them won’t miss a meal. But I said MOST of them. In past oil patch collapses I’ve seen 1 percenters that got way over leveraged and lost everything. One of them I knew personally lost his trophy wife and moved into the pool house of a college buddy that didn’t piss his 1% away.
I don’t expect you to shed a tear over the oil patch 1% that just lost tens of $BILLIONS anymore then I will. But that doesn’t mean they don’t take a financial hit. Hopefully enough of the 1% will scrape by since many of the paychecks of the 99% come from companies owned by the 1%.
Except, of course, for all gov’t workers who get all their income from the taxes paid by the 100%. LOL.
paulo1 on Sat, 3rd Jan 2015 8:24 am
@Rockman
I have been in a few industries that shut down just as fast. Logging support and also in construction. However, there were always clues it was going to happen. For those with shut eyes it was a helluva shock. For those that were aware of the state of the projects or economic trends, the writing was on the wall.
As old Art (the barge loader) said to the tug deckhand who just bought a house with a big mortgage payment, “it’s not what you can afford when you’re working, it’s what you can afford when you’re not working”. And now those good deckhand jobs have slouched down to chippy non-union companies and very few are working.
When it seems like it will never end and good times are forever, that’s when it does.
I was building condos in Alberta many years ago when the company I worked for pulled the plug with 5 minutes notice. My cheque was the only one that didn’t bounce as I knew a guy whose wife was a bank manager and she froze funds for me as they were transferring accounts around.
Kenz300 on Sat, 3rd Jan 2015 9:00 am
You can not sell product at a loss and stay in business for long.
J-Gav on Sat, 3rd Jan 2015 11:26 am
Rockman – Guess it depends on your definition of “suffering,” see what I mean?
shallowsand on Sat, 3rd Jan 2015 7:38 pm
So far, in terms of crash, this one is not even as severe as some others. 1986 $28 to $8 and 2008 145 to 32 have it beat thus far. So far this time we’ve went from 107 to 52 WTI. Can’t beat 2008.
Issue is duration as well as price reduction. I’ll take 2008 over 1986, which IMO didn’t really end till 1999. If this lasts 12-13 years, will be a lot of small producers and small service co looking for something else to do. Furthermore, almost none of the shale debt principal will be repaid.
Mark Ziegler on Sun, 4th Jan 2015 6:15 am
If need be accounts will find their write-offs and file for bankruptcy. They just did it t Detroit so get in line.
viewcrafters
shortonoil on Sun, 4th Jan 2015 7:56 am
Many analysis like to quote 2008 as a water shed year. In actually the 2008 spike had almost no impact on the average year to year price. It was a year of high volatility in price, but almost no change. The 2008 to 2009 price difference was less than 2%. 2013 to 2014 will see a year to year price swing of 20%. 2014 will be catastrophic for the petroleum industry.
Year…WTI
2005…73.72
2006…73.44
2007…72.99
2008…73.69
2009…72.26
2010…87.48
2011…71.21
2012…94.05
2013…97.98
shallowsand on Sun, 4th Jan 2015 9:21 am
I don’t think your annual numbers are accurate. 2008 is definitely wrong, as is 2009. 2011 also is wrong for sure.
Kenz300 on Mon, 5th Jan 2015 9:00 am
Depletion continues…….
Oil subsidies continue in oil exporting countries increasing their internal demand……