According to productivity data from the US Energy Information Administration (EIA), production from the country’s largest shale formations will likely decline moderately next month, indicating that there is little haste to return production to pre-pandemic levels.
Overall, the EIA expects production in the seven formations to drop by 121,000 barrels per day (bpd) to 7.692 million bpd. The Eagle Ford and Niobrara are expected to experience the largest falls of 34,000 bpd and 28,000 bpd respectively. The total production of natural gas is also expected to drop by 67,000 cubic feet per day.
In contrast, new well production for each rig is expected to rise on average in most of the regions. In combination with the noted declines, this suggests that operators are focusing their efforts on the most promising plays in order to maximise returns during a time of relatively low oil prices. In the past, the owner of the Mobil lubricant range, ExxonMobil, claimed that its then newly acquired shale assets could generate “attractive returns” even at the current $40 per barrel level, but drilling could also be stopped and started in response to oil prices.
Despite the challenging market conditions, US oil production has remained fairly stable and has even made a moderate recovery to about 11 million bpd this month. While this is still some way off the almost 13 million bpd the country was pumping at the end of last year, it indicates that the shale revolution has not run out of steam yet.