U.S. Oil Production on the Rise, Despite Lower Rig Count

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Researched by Industrial Info Resources (Sugar Land, Texas)--Last week, oil field services firm Baker Hughes (NYSE:BHI) (Houston, Texas) reported that the number of rigs drilling for oil in the U.S had declined for the ninth straight week, falling by 83 to 1,140 rigs, the lowest number since December 2011.

Although the number of new wells being drilled is declining, U.S. crude oil production continues to rise, as existing wells continue flowing and previously drilled wells are completed and begin production.

In its latest "Drilling Productivity Report," released February 9, the U.S. Energy Information Administration (EIA) shows continued production increases from the major production areas in the U.S., including the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica formations. According to EIA data, these seven regions produced approximately 5.41 million barrels per day (BBL/d) in January 2015. The EIA forecasts that output from these formations will be 5.52 million BBL/d in February, and continue climbing to 5.58 million BBL/d in March.

These regions have accounted for the bulk of growth in U.S. crude oil production in recent years, and the upward trajectory is indicative of overall U.S. production. The EIA's latest crude oil production figures for the entire country, including Alaska and federal offshore drilling, provide results through November 2014, when the U.S. produced an average of 9.02 million BBL/d.

The agency's latest "Short-Term Energy Outlook," released February 10, estimates that total production in the U.S. will average 9.3 million BBL/d in 2015 and 9.5 million BBL/d in 2016.

The increase comes in the face of continually increasing crude oil stockpiles. U.S. crude oil stocks climbed to more than 400 million barrels in the second half of January--setting an all-time high storage record since the EIA began keeping records in 1982.

Although producers have made major budget cuts and curtailed investment, U.S. crude production is expected to continue increasing over the next few months, as previously drilled wells are brought online, before the effects of reduced drilling are felt.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 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.