Eagle Ford Production Expected to Decline

EIA Reports the Surge May Be Over
Eagle Ford Production to Dip in April

Eagle Ford Production to Dip in April

2014 was a record breaking year as shale oil production across the United States surged, but a new report suggests that trend may be shifting.

U.S. gains increased at least 100,000 barrels per day for 10 of the last 16 months. The Eagle Ford saw the same surges, as production increased from approximately 1,2 million barrels daily in 2014 and to over 1.7 million last month.

Related: Six Eagle Ford Counties Rank as Top U.S. Oil Producing Areas

Even the weekly loses of oil rigs since October hasn’t stopped production from soaring into numbers that have contributed significantly to a worldwide surplus. But this record streak may be coming to an end.

The U.S. Energy Information Administration (EIA) released a report on Monday that predicts oil production in the Eagle Ford Shale will dip in April, and possibly usher in a new trend of slower production. EIA analysts say that the Eagle Ford will produce 1.72 million barrels daily of crude oil and other liquids in April, down from an average of 1.73 million barrels daily this month.

Across the country, production from the six largest shale plays will hit 5.6 million barrels per day in April, which will be the smallest increase since February 2011.

This anticipated decline hasn’t changed the fact that reserves are still very high. EIA reports that stockpiles grew by 4.5 million barrels last week brining the U.S. reserves to 449 million barrels of oil in storage.  It has been at least 80 years since the level has been this high.

Read more at eia.org

U.S. is World’s Largest Oil Producer

Texas Contributes More than 1/4 of Total U.S. Crude Production
U.S. Oil Production

U.S. Oil Production | Click to Enlarge

The U.S. is now the world’s largest producer of oil, surpassing Russia and Saudi Arabia, according to Bank of America Corp. (BAC), as reported in Bloomberg.

U.S. crude oil output in the first quarter surpassed 11-million b/d, which was the highest volume produced by the country in 24 years. The U.S. is expected to hold the top spot through the end of the year, BAC officials said.

Most of that production is coming from Texas and North Dakota, which produced nearly half (48%) of all U.S. oil in April of 2014, according to the Energy Information Administration (EIA). Texas alone produced nearly 3-million b/d in the same month, thanks largely to the Eagle Ford Shale, reaching production levels not seen since the 70s.

Read more: Texas Oil Production Reaches Levels Not Seen Since the 70s

According to the International Energy Agency (IEA), U.S. oil output will increase to 13.1 million b/d in 2019 and plateau. Most analysts agree the Eagle Ford and Bakken Shale plays, which are largely responsible for production in Texas and North Dakota, will peak around this time, and begin to decline.

Oil Inventories Stacking Up

With the glut of oil being produced in the U.S., crude inventories on the U.S. Gulf Coast (USGC) have recently climbed to record levels according to the EIA, hitting 207.2 million bbl on April 11, 2014. The EIA says the USGC region has about 275 million bbls of current capacity, but more midstream projects pushing oil to the USGC have been scheduled.

To accommodate the influx of oil into the region, several crude oil storage projects are expected along the USGC through 2016. Recently, Haddington Ventures LLC, a midstream oil and gas investment firm, was identified in a Wall Street Journal (WSJ) blog as the designer/builder for a major crude oil storage project in Houston, TX.

Read more: Crude Supply Creates Demand for Storage Projects on USGC

Overall, the challenges that have come and will continue to come with the oil & gas renaissance in the U.S. seem to be outweighing most of the negative impacts. Namely, U.S. energy independence is the most favorable outcome, with tensions growing in Russia and unrest in the Middle East. The EIA predicts the U.S. will be energy independent by 2035.