USL48 production might ramp up sooner than expected, says GlobalData

After almost three months since the start of the COVID-19 pandemic, GlobalData estimates crude oil production in the USL48 to reduce from an average of approximately 10.3 million barrels of oil per day (mmbd) in January 2020 to 8.2 mmbd in December. Consequently, the reduction in associated gas resulted in a decline in natural gas production from an average of approximately 98.5 billion cubic feet per day (bcfd) in January 2020 to 92 bcfd in December.

Steven Ho, Oil and Gas Analyst at GlobalData, comments: “The oil production cuts intensified during April and May and Permian Basin experienced the biggest decline in crude oil, summing up to approximate 1 mmbd, followed by Bakken and Eagle Ford with 0.6 and 0.2 mmbd respectively. Many operators have put a halt in their development plan and forgone their guidance for 2020, however opting to remain flexible to react to the crude oil prices. Some operators might bring back shut in wells but overall activity will be depressed until prices go permanently above $45 per barrel. For now the expectation remains for a gradual increase in mobility during H2, which should support an increase in refineries crude intake in line with current oil supply ”

Ho continues: “As for the natural gas decline, Permian and Eagle Ford sums up to approximately 3.5 bcfd and 1 bcfd as a result of oil well production curtailment. Reduced drilling activity seen in Appalachian region caused a decline of approximately 0.6 bcfd from January to December 2020 as producers sit back until gas demand recovers. As per GlobalData analysis, natural gas production will start stabilizing in Q3 and Q4 of 2020 as drilling activity ramps up slowly, supported by an increased demand heading into winter and the assumption of increased industrial activity.”

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