990WBOB
  • WBOB READS
  • WBOB Radio
  • Past Casts
  • F Bomb Friday
  • Register To Win
  • Weather
  • Contact
  • About
    • WBOB Press Releases
    • Join Our Team!
    • CHARITY GALA

U.S. Oil Production: Strong Growth May Come to a Halt in 2015

2/3/2015

Comments

 
Picture
Stunning growth in U.S. oil production may come to a halt by mid-2015 as low oil prices begin to constrain U.S. tight oil production, which has been the dominant engine of world oil supply gains in recent years, according to a new report by IHS (NYSE: IHS), the leading source for global information and analytics. Growth is still expected in the early months of 2015 but that momentum will level off in the latter half of the year amidst prices at lows not seen since the 2008-09 Great Recession.

“So much can happen over the course of a year”

The new report, based on an IHS study of 39,000 wells, points to the possibility of month-to-month U.S. oil production growth coming to a halt in the latter half of 2015, assuming that West Texas Intermediate (WTI) prices remain below $60.
The study identified a wide spectrum of break-even prices for U.S. crude oil production. About a quarter of new wells in 2014 had a breakeven WTI price of $40 or less. Just less than half of new wells in 2014 had a breakeven price of $60 or less. At the opposite end of the spectrum, nearly 30 percent of new wells had breakeven prices of $81 or higher. The break-even level is the WTI price needed to cover capital and operating costs and generate a 10 percent return.

Hedging programs, finishing work on uncompleted wells, contractual obligations and further drilling of the most economic tight oil plays mean that many new wells will still be drilled in 2015. But adverse economics and lower spending will lead to fewer wells drilled than in 2014, the report says.

Monthly average U.S. production at the close of 2015 is projected to be about half a million barrels per day above the January 2015 average, but nearly all of that growth will come in the first half of the year. By December 2015, U.S. oil production growth will have been flat for several months, the report says.

“U.S. oil production has been the main engine of global supply growth in recent years,” said Jim Burkhard, Vice President, IHS Energy. “And momentum from strong growth in the second half of 2014 means the impact of lower prices will not immediately drive production lower. But the reality of lower oil prices and less spending on new wells will affect production as 2015 progresses.”

The fate of U.S. oil production growth past 2015 and into 2016 will be shaped by global economic conditions, geopolitics and changes in industry costs, all of which are in a state of flux, according to Raoul LeBlanc, IHS Energy Senior Director, Financial Markets and co-author of the report.

“So much can happen over the course of a year,” LeBlanc said. “If oil prices remain weak and confidence in future prices remains shaken, U.S. production in 2016 could possibly flatten or even decline. But there is plenty that could happen—a recovery in oil prices, lower upstream costs and improved well productivity—that would quickly change the calculus of drilling new wells and reinvigorate U.S. production growth.”

courtesy of ihs.com


More WBOB News & Politics


McConnell Turns Tables on Reed, Whitehouse

ACLU Troubled by Kennedy Plaza Surveillance Cameras

Providence Heroin Trafficker Pleads Guilty, Facing up to 40 Years in Federal Prison

Schaper: How Inhofe Schooled Whitehouse on Climate Change
Comments

    WBOB
    Original
    ​Reads

    Picture

    Unbiased, Unfiltered. WBOB's Original Reads feature our brightest and boldest personalities, offering their two-cents on the goings on of news, sports, politics, entertainment, and business. -- Are our opinions always PC? Nope. Are they always perfect? Nah. But, are they always 100% authentic? Absolutely!


    LISTEN
    ​TO WBOB ORIGINAL PODCASTS

    Picture
    Listen to
    ​Past BOBCasts

    WBOB 
    Best Reads
    Brought To You By
    TripAdvisor.com

    Picture

    Celebrating David Clyde: A Wild Passionate Friend To All


    Picture

    Search 
    The Archives


    Reads From Our Friends

    Picture

    The Best Game Development Tools: How to Make Your Own Game


    Contact Us
    info@990WBOB.com


Search For Your Favorite WBOB Author,
​or BobCast

990WBOB 
An Independent Media Outlet.

The views opinions and thoughts expressed do not  reflect those of 990WBOB, its management or its staff. All Rights Reserved 990WBOB.com 2007-2020
​
Contact WBOB HERE

WBOB Reads

Weather

Live BOBCasts

Past Casts

Contact Us

Join Our Team!

Featured Supporters

Picture
Picture
Picture
Picture
Picture
Picture
Photo used under Creative Commons from nzhamstar
  • WBOB READS
  • WBOB Radio
  • Past Casts
  • F Bomb Friday
  • Register To Win
  • Weather
  • Contact
  • About
    • WBOB Press Releases
    • Join Our Team!
    • CHARITY GALA