U.S. oil output from seven major shale formations is expected to rise by 85,000 barrels per day (bbl/d) in September, to a record 8.77 million bbl/d, the U.S. Energy Information Administration forecast in its monthly drilling productivity report on Aug. 12.
The largest change is expected in the Permian Basin of Texas and New Mexico, where output is seen climbing 75,000 bbl/dd to 4.42 million bbl/d in September, also an all-time high. That is the biggest increase forecast for the basin since April.
Output in North Dakota and Montana’s Bakken region is expected to edge higher by 3,000 bbl/d to a record 1.44 million bbl/d, the data showed.
Production increases in the Permian and Bakken have been at the forefront of a shale boom that helped make the United States the biggest oil producer in the world, ahead of Saudi Arabia and Russia.
Output increases in the Permian, the country’s largest basin, had slowed as independent oil producers cut spending on new drilling and completions and focus more on earnings growth. Still, majors are ramping up spending.
Permian oil production had also surged beyond pipeline takeaway capacity, weighing on regional oil prices for over a year. But the startup of new pipelines, such as Plains All American Pipeline LP’s 670,000-bpd Cactus II pipeline system, are beginning to support prices there.
In the Niobrara, spanning Wyoming and Colorado, output is expected to rise by 12,000 bbl/d to a record 758,000 bbl/d.
Separately, U.S. natural gas output was projected to increase to a record 81.6 billion cubic feet per day (Bcf/d) in September.
That would be up 0.7 Bcf/d over the August forecast, putting production from the big shale basins up for a fourth month in a row even though the number of rigs in each region has declined since the start of the year.
That is because rig productivity—the amount of gas new wells produce per rig—was up in every region since the start of the year. A year ago in September, output was 73.3 Bcf/d.
Output in the Appalachia region was set to rise almost 0.4 Bcf/d to a record 32.6 Bcf/d.
The EIA said producers drilled 1,311 wells and completed 1,411 in the biggest shale basins in July, leaving total drilled but uncompleted (DUC) wells down 100 at 8,108. That was the biggest monthly decline in DUCs since March 2018.
Hedge funds cut their bullish positions in petroleum last week for the second week running as anxiety about the slowing global economy and oil consumption trumped optimism over production restraint by OPEC and its allies.
In the first seven months of 2019, natural gas feedstock deliveries to LNG export facilities have been the fastest growing among all U.S. natural gas consumption sectors, the EIA says.
Exports to Europe increased amid declining demand, prices in Asia, says EIA.