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The United States Energy information Administration’s monthly report on domestic shale outputs puts oil production down by 99,000 barrels per day from July to August of this year.
The report included production rates from the seven largest shale players in the U.S. market and predicted that the per day barrel count would land at 4.55 million by the end of next month.
The Eagle Ford shale site in Texas will suffer the largest downturn, with output slumping by 48,000 barrels in August, the EIA site said.
The Bakken shale play, which begins in Canada and extends into North Dakota and Montana, will see output declines by 32,000 barrels a day, according to the report.
The report did not provide causes for the output declines.
U.S. shale is the lowest cost option for new oil production, and thus will likely remain more competitive than conventional offshore drilling, a report from Wood Mackenzie last week said.
The U.S. shale industry has weathered the oil price downturn, tweaking drilling practices and cutting costs in order to stay in business, the report said, adding that the industry is proving to be resilient and flexible in the face of the worst oil market crisis in three decades.
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The report concludes that U.S. shale companies have managed to cut costs by as much as 40 percent since 2014. Much of that comes from lower costs from equipment suppliers and oilfield services firms. But it also comes from improved productivity from the average shale well. Instead of drilling anywhere and everywhere, U.S. shale companies are getting better at finding the “sweet spots.”
The report also found that conventional oil drillers have not had as much success in reducing costs. Non-shale drilling projects only achieved cost reductions on the order of 10 to 12, meaning large oil projects are not economical with oil prices at $60 per barrel.
By comparison, the Eagle Ford has an average breakeven price of $48 per barrel for Brent, and the Wolfcamp in the Permian Basin has a breakeven price of just $39 per barrel.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…