US oil drillers keep pressure on OPEC with record shale output

 15 Aug 2017 - 1:02

US oil drillers keep pressure on OPEC with record shale output
Executives and guests of C&J Energy Services Ltd ring the opening bell at the New York Stock Exchange (NYSE) to celebrate their re-listing following successful completion of Chapter 11 reorganisation in New York, yesterday.

By Catherine Traywick / Bloomberg

Oil output from major U.S. shale plays is poised to reach a fresh record next month, further complicating OPEC’s efforts to support prices.

The Energy Information Administration expanded its monthly forecasts to include the Anadarko shale region spanning 24 Oklahoma and five Texas counties. The region, a well-established oil and gas producing area, has seen an uptick in improved drilling and completion technology, the agency said in its monthly Drilling Productivity report released Monday.

The U.S. shale production gain is being led by the oil-rich Permian basin of New Mexico and Texas, where production has risen steadily over the past two years. The agency projects Permian output to rise by 64,000 barrels in September, reaching a record of 2.6 million barrels a day.

The forecast comes just as Saudi Arabia and Iraq, the two biggest producers of the Organization of Petroleum Exporting Countries promised to strengthen their commitment to cutting production. Crude output in the U.S. meanwhile has climbed in nine of the last 10 months. Prices declined to a three-week low Monday amid global glut concerns. Non-OPEC supply is set to expand over the next five years, while growth in total oil demand will slow, according to a note by Sarah Emerson, energy principal at ESAI Energy in New York.

The EIA report also made another change to reflect shifts in oil and gas production: The agency consolidated data from the Marcellus and Utica areas, known for their natural gas production, and classified it as a single Appalachia region.

"Combining the relatively small number of active rigs across the broader Appalachia region should improve the precision of our productivity estimates," the EIA said, noting that drilling patterns no longer align with previous regional definitions.

Crude output from the Eagle Ford and Bakken regions are also expected to rise in September, with Eagle Ford projected to produce 1.39 million barrels a day and Bakken forecast to produce 1.05 million. Output in the newly included Anadarko region is poised to reach 459,000 barrels.