Energy Prospectus

EIA issued its monthly 914 report today, showing a 25k bpd (0.2%) increase in production in June (13,214,000) vs May (13,189,000). https://www.eia.gov/petroleum/production/.

U.S. oil production still down over 100,000 bpd YTD.

IEA keeps telling everyone that U.S. oil production is going up. They list the U.S. as the #1 growth area for Non-OPEC+ oil production growth in 2024.

OilPrice.com: U.S. Oil, Gas Drilling Activity. Oil Production Slip
By Julianne Geiger - Aug 30, 2024, 12:11 PM CDT

The total number of active drilling rigs for oil and gas in the United States fell again this week, according to new data that Baker Hughes published on Friday.

The total rig count fell by 2 to 583 this week, compared to 631 rigs this same time last year.

The number of oil rigs stayed the same this week after staying the same in the week prior. Oil rigs now stand at 483—down by 29 compared to this time last year. The number of gas rigs fell by 2 this week to 95, a loss of 19 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 5.

Meanwhile, U.S. crude oil production slipped by 100,000 bpd during the week ending August 23, according to weekly estimates published by the Energy Information Administration (EIA). Current weekly oil production in the United States, according to the EIA, have now returned to their previous record high of 13.3 million bpd. < EIA finally admitting that they have been overstating U.S. oil production all year in their weekly reports.

Primary Vision’s Frac Spread Count, an estimate of the number of crews completing wells that are unfinished, fell again in the week ending August 23, from 234 to 229, adding onto the last two weeks of losses. < Lot of the "gassers" are not completing wells.

Drilling activity in the Permian fell by 1 this week to 305, a figure that is 14 fewer than this same time last year. The count in the Eagle Ford rose by 1 this week, reaching 48 after falling by 1 in the week prior. Rigs in the Eagle Ford are now 2 below where they were this time last year.
Oil prices fell on Friday on rumors that OPEC+ would unwind its production cuts as planned beginning in October. At 12:27 p.m. ET, the WTI benchmark was trading down $1.85 (-2.44%) on the day at $74.06—a roughly $0.70 loss week over week. The Brent benchmark was trading down $1.06 (-1.33%) on the day at $78.88—nearly flat on the week.

By Julianne Geiger for Oilprice.com

Each of the four, June weekly reports were production of 13.2 mm bpd, so it would appear that the 8/30 914 EIA report of June production at 13.214 is pretty consistent with their earlier, June weekly reports. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?f=W&n=PET&s=WCRFPUS2 I.e., for that month, at least, EIA's weekly reports had not overestimated production. And, as you say, June production of 13.214 is down slightly from Dec. 2023 peak of 13.308.

But, July weekly reports were all 13.3, and the first four August weekly reports averaged 13.35 mm bpd (13.4, 13.3, 13.4, 13.3). (We'll have their Aug. 30 weekly report next week.)

If the 10/31/24 914 monthly report shows 13.35 for August production, that would be up slightly from Aug. 2023 (13.047), Dec. 2023 (13.308, which was peak), Jan. 2024 (12.534), Apr. (13.249) and June (13.214).

With rig counts continuing to fall (albeit slightly), and assuming the July and August weekly reports were accurate (as June's were), would it be realistic to predict that US production in 2H will be about 13.3 to 13.4, i.e., flattish to slightly higher vs. Dec 2023 peak of 13.308?

According to EIA's August 2024 STEO, US crude production in 2023 was 12.9 mmbpd, will in 2024 be 13.2 mmbpd, and in 2025 will be 13.7 mmbpd (which seems aggressive). https://www.eia.gov/outlooks/steo/report/

Below is IEA medium term US supply forecast (from their Oil 2024 report, pp. 71-72), https://iea.blob.core.windows.net/assets/493a4f1b-c0a8-4bfc-be7b-b9c0761a3e5e/Oil2024.pdf. [Graph did not paste; LTO= light tight oil.] They project US crude production to increase by 660 kbpd in 2024 and by 2030 to reach 14.1 mb/d, and NGL production to increase by 920 kb/d to 7.4 mb/d by 2030.

It looks like IEA's prediction of an increase of 660 kb/d in 2024 US production will be high, at least judging from US 1H production numbers reported by EIA 914 and EIA's current 2024 prediction.

Resilient yet slower US production growth.

Questions over US oil and gas industry resilience were answered last year as total
liquids increased by 1.5 mb/d, after rising by 1.2 mb/d in 2022. Oil supply is
expected to expand by a further 660 kb/d in 2024, reaching a third consecutive
record high. While US output is set to increase every year through the end of the
forecast period, the pace of growth slows markedly as producers navigate
shareholder requirements, complex wells and a tighter regulatory environment.

The United States is the largest contributor to medium-term supply growth, adding
2.1 mb/d by 2030, bringing total supply to 21.5 mb/d. Crude oil production is
forecast to increase by 1.2 mb/d to 14.1 mb/d. NGLs from processing plants are
set to rise by 920 kb/d to 7.4 mb/d, led by both higher exports and domestic
petrochemical facility utilisation rates as Permian Basin associated gas continues
to drive growth.

US crude oil production will set new record highs in each year of this decade. The
increase is led by LTO, primarily from the Permian Basin. The shale patch has
continued to mature financially to a lower growth trajectory after a wave of M&A
reinforced disciplined investing, deleveraging and returning cash to shareholders.
The next stage of industry evolution will likely surround inventory management,
value chain integration and emissions profiles.

US LTO production increases by 1.7 mb/d from 2023 to 2030, reaching 10.6 mb/d,
while conventional Lower 48 output is expected to decline by 590 kb/d over the
same timeframe. Overall shale production rises just below a 3% compound annual
growth rate, with the Permian Basin providing approximately 80% of it. Gains are
front-loaded, with 420 kb/d of additions this year slowing to just 190 kb/d in 2030.
While LTO remains the major engine of US oil production, annual increases across
all basins slow from the 9% rate posted coming out of the pandemic to just below
3% towards the end of the decade. Headwinds to growth come amid capital
discipline, a recent wave of consolidations, and challenges to productivity and
profitability metrics

Don't forget lads, these are all "funny numbers" don't ignore the 800,150 K recent jobs report downward adjustment. Believe your gut. BS numbers until proven different. We are still paying $4.50 plus in gas in California, unless you shop at Costco where you pay $4.00. Cheers

I may be wrong, but I think that EIA goes back and changes their weekly numbers after they get the 914 report. I know that IEA does go back and adjust their previous forecasts.

Regardless, the point is that U.S. oil production is flat and unlikely to go higher at the current active drilling rig count. We are not running enough completion crews to increase production. I think most private companies are running out of Tier One leasehold.