Shale oil production in the United States will rise by a record-breaking 144,000 bpd from May to June, hitting 7.178 million bpd, the Energy Information administration estimated in its latest Drilling Productivity Report.
Hardly surprisingly, the Permian will lead the way with a 78,000-bpd increase in production, from 3.199 million bpd this month to 3.277 million bpd in June. The Permian will be followed by Eagle Ford, where average daily oil production will rise by 33,000 bpd from 1.354 million bpd to 1.387 million bpd.
The only shale play that will not register an increase in oil production will be Haynesville, where gas production, however, will grow by 201 million cu ft daily—the third-highest monthly gas production increase in the shale patch. The highest will be in Appalachia, where gas production will rise by 373 million cu ft between May and June.
But the record-breaking increase in production is not without problems, especially in the Permian. Production there is rising so fast, the transport infrastructure cannot keep up with it, and bottlenecks are beginning to emerge.
According to analysts, the current pipeline capacity in the Permian will be exceeded by the middle of the year, which means new ones need to be built urgently. There are already proposals for new capacity of a total 2.4 million bpd and strong interest from producers, who are concerned about the discount their oil would have to trade to other shale crudes because of the transport constraints.
One of these is the EPIC pipeline, which will be able to carry 590,000 bpd of Permian crude to refineries and other buyers. The company behind the project, EPIC Midstream Holdings, has received commitments for almost a third of the planned capacity from Apache Corp and Noble Energy, and chances are more will follow and soon to secure an outlet for their oil.
By Irina Slav for Oilprice.com
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