The Energy Information Agency (EIA) announced yesterday that oil production in the nation is expected to drop in November to about 4.43 million barrels a day. Overall, the EIA expects production declines in both the Eagle Ford Shale of south Texas and the Bakken in North Dakota and Montana of roughly 35,000 and 21,000 barrels per day, respectively.
At the same time, however, analysts are seeing the decline in domestic oil production slowing, with the expectation that it will begin increasing sometime in 2017 and into 2018.
There is, however, a bright spot in current domestic oil production — the Permian Basin in west Texas and New Mexico. The EIA expects oil production in the Permian to exceed 2 million barrels of oil a day next month. The Permian continues to be the most profitable oil producing basin largely because its operating costs are significantly cheaper than in the other basins.
Recently we’ve seen various headlines in the press noting increased rig counts and a “revival” in U.S. oil production. Those articles typically don’t tell the whole story, in that they ignore the contrast between the Permian and the other basins. While the Permian’s production growth is laudable, we continue to be cognizant of the hard times being faced by oil field workers, service sector companies and operators in much of the oil patch.
Next week, we’ll discuss in more detail the Permian Basin of U.S. shale production.