US Oil Supply in October 2014

Source: OPEC 11/8/2014, Location: North America

US oil supply is forecast to average 12.62 mb/d in 2014, indicating growth of 1.40 mb/d over the previous year, the highest among all non-OPEC countries, representing an upward revision by 0.1 mb/d from the previous MOMR. According to the US Energy Information Administrationís (EIAís) official data, US crude oil production for July 2014 was estimated at 8.537 mb/d, a drop by 3 tb/d compared to a month earlier. The increasing volume came mainly from North Dakota and Texas, particularly from the Permian shale play, while output in Alaska and the Gulf of Mexico declined.

Oil production from the Gulf of Mexico is expected to increase from 1.25 mb/d in 2013 to 1.67 mb/d in 2015, with 11 projects starting this year. Oil production from six projects started up in the first half of 2014: Na Kika Phase 3, Mars B, Dalmatian, Entrada, Atlantis Phase 2, and Tubular Bells. More oil is expected to be produced from the Cardamom Deep, South Deimos/West Boreas, Hadrian South and Jack/St. Malo and Lucius projects in 4Q14. Oil production in the US Gulf of Mexico decreased to average 1.406 mb/d in July 2014 in spite of new projects starting up, indicating a drop of 8 tb/d compared with the previous month. Other new projects coming online from September onward should boost Gulf of Mexico output at the end of this year. The Tubular Bells project came online in September and will ramp up to 44 tb/d by November. The Lucius project is also on schedule for first oil in early 4Q14. Finally, Jack St. Malo will come on stream in December with a peak capacity of 100 tb/d. Further new projects will be added at year end, but averaged across the year, the US Gulf of Mexico is unlikely to grow by much more than 0.1 mb/d, as high decline rates at existing fields offset much of the growth from new additions.

Alaskaís oil production averaged 0.42 mb/d in July, indicating a 63 tb/d decline in output, mainly due to seasonal maintenance. Oil output also declined a total of 66 tb/d in North Slope and South Alaska. Alaskan crude production dropped in the first seven months by 13 tb/d compared with the same period in 2013 to average 507 tb/d, the lowest level for the same period since 1977. The output drop is taking place due to limited new developments and declines in mature producing areas. The key tight oil regions ? Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica ? accounted for 95% of domestic US oil production growth.

Preliminary data for 1 October indicates that the Bakken regionís oil output averaged 1,179 tb/d, a m-o-m increase in oil production of 27 b/d, with average new-well-per-rig oil production reaching 530 b/d. The Eagle Ford regionís oil output averaged 1,582 tb/d in October, a m-o-m rise in oil production of 31 b/d. Average new-well-per-rig oil production reached 536 b/d. The Permian regionís oil output averaged 1,757 tb/d, a m-o-m rise in oil production of 39 tb/d, with average new-well-per-rig oil production reaching 171 b/d. On a quarterly basis, US oil supply is seen to average 11.95 mb/d, 12.66 mb/d, 12.87 mb/d and 12.99 mb/d, respectively.

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