Oil production will fall by 92,000 b/d from February to March in key US onshore plays, the US Energy Information Administration said Monday.
The biggest forecast drop will be in the Eagle Ford, where EIA sees supply falling 50,000 b/d to 1.222 million b/d in March from 1.272 million b/d in February. The Bakken, where EIA expects production to fall to 1.1 million in March from 1.125 million b/d in February, and the Niobrara, where production is forecast to fall to 389,000 b/d in March from 404,000 b/d in February, are also expected to see substantial drops.
In addition, production in the Permian will climb to 2.04 million b/d in March, just 1,000 b/d more than the play's estimated production this month. Permian supply, which has grown despite declines in other US plays, appears to be nearing its first month-to-month decline since the EIA began tracking drilling productivity in late 2013.
The EIA has forecast month-to-month production declines in the Bakken, Eagle Ford and Niobrara since March 2015, but the projected drops appear to be more modest than those forecast by EIA late last year, despite persistent low prices and planned spending cuts by US producers.
In November, EIA forecast Eagle Ford production would fall by 78,000 b/d from November to December and in May EIA forecast Bakken production would fall by 31,000 b/d from May to June.
The new estimates Monday were included in the EIA's monthly Drilling Productivity Report, which looks at supply in seven onshore regions that have seen the most prolific growth recently. The report does not, for example, look at Gulf of Mexico or Alaska production.
Overall, EIA forecasts oil production to decline by 92,000 b/d from February to March in these regions, compared with the same time a year earlier when EIA forecast growth of 68,000 b/d.
EIA has shown production declines for 15 straight months, after the month-over-month forecast peaked at an estimated 125,000 b/d increase in December 2014.
Despite the expected decline, EIA continues to see improvements in rig efficiency in these seven regions, as new well oil production is expected to climb to an average of 504 b/d per rig in March from 500 b/d in February. A year ago, wells in these regions averaged 352 b/d, according to EIA.
The EIA's report comes as exploration and production companies plan for capital spending cuts as they release fourth-quarter earnings featuring billions of dollars in losses. North American producers plan to cut on average about 23% from 2015 spending levels, according to an analysis by IHS Energy. That analysis shows, however, that these companies will need to cut these spending levels by 50% in order to maintain the traditional ratio between capital spending and cash flow.
"Given that most companies made preliminary 2016 spending plans when the price outlook was comparatively higher, we expect to see further spending cuts announced throughout the fourth-quarter 2015 earnings cycle that reflect the current price environment," Paul O'Donnell, principal analyst at IHS Energy and author of the analysis, said in a statement.http://www.platts.com/latest-news/oil/washington/us-oil-production-to-fall-92000-bd-in-march-in-21901829