Completions

A question we get asked all the time these days is whether or not U.S. crude output has begun to decline yet and if so by how much? We don’t actually think the answer makes a lot of difference to the market - especially when you consider changing imports and inventory. But ever since the OPEC meeting last November (2014) failed to take action to reduce  output to support oil prices - market watchers have placed a lot of emphasis on when U.S. shale producers would respond by cutting production. So regardless of the merits of the question we are all living in a marketplace where knowing the “real” state of U.S. production – and whether it is up or down – has become a big deal. To that end today we look at crude production data from the Energy Information Administration (EIA).

Data from the North Dakota Industrial Commission (NDIC) indicate that production in January 2015 slowed by 37 Mb/d from record levels over 1.2 MMb/d in December. The number of new well completions also slowed in January – leading to a large backlog of wells drilled and waiting to start producing. Lower production and completions are in part due to producer caution following the crude price crash last year but producers waiting for a North Dakota state tax break and the usual impact of winter weather could also be responsible. Today we describe how new state tax incentives could boost summer output back to record levels.