EIA: Crude Oil, Natural Gas Production to Increase in 2017

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Researched by Industrial Info Resources (Sugar Land, Texas)--In its latest Short Term Energy Outlook, the U.S. Energy Information Administration (EIA) maintains that natural gas and crude oil production in 2017 will exceed 2016 levels. This comes despite a decline in production in recent weeks, as Hurricane Harvey smashed into Texas and the Gulf of Mexico, affecting oil and gas production installations. Refinery runs also are expected to be lower in September, as refineries affected by Harvey return online.

The EIA estimated that U.S. crude oil production in August averaged 9.2 million barrels per day (BBL/d), down about 40,000 BBL/d from July. Much of this decrease in production comes from the Gulf of Mexico, which, at 1.6 million BBL/d of production in August, was about 70,000 BBL/d less than July levels. The EIA estimates that U.S. crude oil production in 2017 will average 9.3 million BBL/d, up from 8.9 million BBL/d in 2016, and rise to 9.8 million BBL/d in 2018, surpassing the previous annual record set in 1970.

Much of this growth in production is coming from the Permian Basin. Among the drilling programs being tracked by Industrial Info in the region is WPX Energy Incorporated's (NYSE:WPX) (Tulsa, Oklahoma) program in the Bone Springs production field in Loving County, Texas. The program commenced earlier this year and will include the drilling of five 9,200-foot-deep vertical wells to produce crude oil. Oryan Drilling (Odessa, Texas) is acting as a contractor on the project, which is expected to be completed by the end of the year. For more information, see Industrial Info's project report.

The SCOOP play in Oklahoma also is an area of increasing drilling for oil. Among the drilling projects being tracked in this area is Continental Resources Incorporated's (NYSE:CLR) (Oklahoma City, Oklahoma) program in Grady County, Oklahoma. The company will use five rigs to drill 24 wells to produce 60,000 BBL/d of crude oil and condensate. The project kicked off early this year and is expected to be completed by the end of the year. Heimerich & Payne Incorporated (Oklahoma City) is acting as contractor on the project. For more information, see Industrial Info's project report.

The EIA reports that dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.4 Bcf/d increase from the 2016 level of 72.3 Bcf/d. Production in 2018 is forecast to be 4.4 Bcf/d higher than 2017. While the Permian is heavy in natural gas liquids, much of the dry gas produced in the U.S. comes from the Marcellus and Utica shales in the northeastern U.S. In this region, Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas) is underway with a drilling program in Susquehanna County in northeastern Pennsylvania. The wells will have an average vertical depth of 6,500 feet and a horizontal distance of 5,000 feet, with a total well production capacity of 2 Bcf/d. Precision Drilling (Houston) is acting as contractor on the project. For more information, see Industrial Info's project report. For additional information on Cabot, see September 6, 2017, article - Cabot Poised to Double Gas Production in Marcellus Shale.

The EIA reports that refinery runs declined significantly following Hurricane Harvey. Refinery runs averaged 14.8 million BBL/d for the week ending September 1, down by 3.1 million BBL/d from the previous week. The agency expects September refinery runs to average 15.3 million BBL/d in September, down from an estimated 15.9 million BBL/d in August. IIR Energy and Industrial Info's new Disaster Impact Tracker continue keeping our clients up to date on facilities impacted by the recent hurricanes in the U.S. For more on Industrial Info's Disaster Impact Tracker, see September 12, 2017, article - Industrial Info Introduces Disaster Impact Tracker.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.