The largest monthly drop in U.S. crude oil production in more than a decade in July is likely a temporary, geographically isolated glitch largely due to Gulf of Mexico shut-ins due to Hurricane Barry, the EIA said on Wednesday, expecting that U.S. crude oil production will return to grow month on month throughout the rest of this year.
According to the EIA’s most recent Petroleum Supply Monthly, U.S. crude oil production dipped in July by 276,000 barrels per day (bpd) from June. This was the largest decline in monthly crude oil production in more than a decade. This production drop was temporary and geographically constrained to the U.S. Gulf of Mexico area, where operators shut in production and evacuated platforms ahead of the expected passing of Hurricane Barry, according to EIA.
The Federal Offshore Gulf of Mexico saw its crude oil production plunge by 332,000 bpd in July, the EIA data showed.
Oil and gas producers shut in as much as 73 percent of the oil production in the Gulf as Barry passed through the area.
In the October Short-Term Energy Outlook, EIA expects that U.S. crude oil production will increase in each of the remaining months of 2019, and reach 13.0 million bpd in December 2019. This year’s U.S. crude oil production is forecast to average 12.3 million bpd, while the 2020 production is seen averaging 13.2 million bpd.
Although production is expected to have picked up from the July dip, the EIA acknowledged that the slowing rate of growth in shale production reflects relatively flat crude oil prices and slowing growth in well-level productivity.
The growth rate is set to level off in 2020, due to lower oil prices in the first half of the year and continuing declines in well-level productivity, the EIA says.
Meanwhile, the U.S. shale patch is bracing for an extended period of weak oil prices, and drillers and oilfield services firms are cutting staff and reducing budgets to weather the slowdown in North America’s fracking growth.
By Tsvetana Paraskova for Oilprice.com
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Highly authoritative studies and reports have shown unambiguously that shale oil production is slowing down even in the Permian which accounts for 60%-70% of US shale oil production.
The die is cast for the US shale oil industry. In 5-10 years it will be no more. This is the price the US shale industry is paying for continuing to be unprofitable year after year. If judged by the standard commercial criteria by which other successful companies are judged, it would have been declared bankrupt years ago.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Reed Olmstead
Director of Upstream Research
IHSMarkit
"Conclusions
While U.S. shale oil production will probably have a positive impact on domestic oil production and
the level of oil imports, it will hardly make a dent in the global oil supply.
Total U.S. oil production oil will peak at 7.50 mbd in 2019 before it starts to decline reaching 6.10
mbd by 2035. This means that there is neither a chance for the United States ever to become self-sufficient in oil nor to overtake either Saudi Arabia or Russia in oil production. Moreover, the U.S. will never
be in a position to deny OPEC the power to set global oil prices.
However, the biggest obstacles to an expansion of U.S. shale oil production would be a backlash
against its adverse impact on the environment, lack of oil transport and refining infrastructure and rising
costs of production. Without higher prices exceeding $100/barrel, no one would be chasing shale oil.
The U.S. shale oil boom would not be easy to replicate in the rest of the world nor will it invalidate
the concept of peak oil."
WRONG