U.S. shale production is expected to rise by about 145,000 barrels per day (bbl/d) to a record 7.18 million barrels per day (MMbbl/d) in June, the U.S. Energy Information Administration (EIA) said on May 14.
A majority of the increase is expected to come from the Permian basin, the biggest U.S. oil patch, where output is expected to climb 78,000 bbl/d to a fresh record of 3.28 MMbbl/d, the EIA said in its monthly drilling productivity report.
Soaring Permian crude production has already outpaced pipeline takeaway capacity, depressing prices in the region and leaving traders scrambling for alternatives to get crude to market.
Bakken output is expected to rise 20,000 bbl/d to 1.24 MMbbl/d, the highest since June 2015, while Eagle Ford production is set to rise 33,000 bbl/d to 1.39 MMbbl/d, the highest since February 2016.
Production in the U.S. has surged thanks to the shale boom, helping send U.S. crude futures’ discount to international benchmark Brent crude futures to the widest in six months.
Meanwhile, U.S. natural gas production was projected to increase to a record 68.1 billion cubic feet per day (Bcf/d) in June. That would be up almost 1.1 Bcf/d over the May forecast and would be the fifth monthly increase in a row.
A year ago in June output was just 56.4 Bcf/d.
The EIA projected gas output would increase in all of the big shale basins in June.
Output in the Appalachia region, the biggest shale gas play, was set to rise almost 0.4 Bcf/d to a record high of 28.1 Bcf/d in June. Production in Appalachia was 23.5 Bcf/d in the same month a year ago.
EIA said producers drilled 1,297 wells and completed 1,242 in the biggest shale basins in April, leaving total drilled but uncompleted wells up 55 at a record high 7,677, according to data going back to December 2013.
Devon Energy CEO Dave Hager said the industry in general, Devon included, has not delivered acceptable returns to investors.
Plains All American’s Cactus II pipeline became the first major energy project to be denied an exclusion to the tariff on imported steel.
Sustained lower oil prices may lead to Permian consolidation, the return of tough times to other shale plays and U.S. E&Ps helping rebalance global inventories.