Oil production from wells drilled has so far been able to keep U.S. crude oil production from falling significantly below its level in late 2014
According to the EIA, U.S. crude oil production from the Lower 48 states from new wells (drilled since the start of 2014) made up 48 per cent of total U.S. crude oil production in 2015, up from 22 per cent in 2007. Production from new wells has grown as advances in horizontal drilling and completion techniques led to growth in oil production from low-permeability tight reservoirs.
U.S. oil production from tight formations increased from 0.5 million b/d in 2009 to 4.6 million b/d in May 2015, at which point decreasing oil prices contributed to declines in oil production.
As of Dec. 2015, oil production from tight formations was 8 per cent lower than the level in May.
More than 80 per cent of oil production from tight formations originates from the Eagle Ford, Bakken, and Permian regions.
Horizontal wells drilled into tight formations tend to have very high initial production rates, but they also have steep initial decline rates. With steep decline rates, constant drilling and development of new wells is necessary to maintain or increase production levels.
Rig counts and the productivity of newly drilled wells, which are tracked in EIA’s Drilling Productivity Report, are two key indicators of future oil production.
Future production can also be affected by the current inventory of drilled but not yet completed wells drilled and the potential for recompleting and refracturing existing wells that may increase production from already-producing wells without drilling new wells.
The U.S. oil-directed rig count totaled nearly 1,600 rigs in the fall of 2014. However, the decline in oil prices over the past 18 months has reduced drilling activity, with just 413 rigs operating as of Feb. 19, 2016.
Low oil prices and reduced capital expenditure for drilling new wells have been reflected in declining crude oil production in the United States since May 2015, despite the continuing increase in initial production rates of the new wells drilled and completed.
Oil production from new wells has so far been able to keep U.S. crude oil production from falling significantly below its level in late 2014.
However, EIA’s Short-Term Energy Outlook projects that U.S. oil production will decline over the next two years, falling to 8.7 million b/d in 2016 and to 8.2 million b/d in 2017.