Will US oil production drop in 2015?
US crude oil output may fall by half this year, according to a projection by the oil cartel OPEC. That goes against what many predict will be a slowdown in production growth 鈥� but not an overall drop.
Oil pumpjacks surrounding McKenzie County work in western North Dakota.
Matthew Brown/AP/File
OPEC says the rate of growth in US crude output may be reduced by half this year primarily because of a decline in drilling by cash-strapped energy companies.
The decline forecast Mar. 16 by the oil cartel comes about three years earlier than听, in which it said it didn鈥檛 expect American production to decrease until 2018.
It also differs from a听听that claims US production remains strong as drillers focus on their most abundant oil fields and that the end of 2015 would see only a production slowdown, not a decline. (Related:听)
Nevertheless, the IEA report, issued March 13, caused an immediate and noticeable drop in the average global price of oil.
Whatever happens will听听to guide any decisions OPEC may make at its regular meeting in June. It was at its last听听that the cartel decided not to cut overall production below 30 million barrels per day which would have helped shore up tumbling prices.
By keeping production at 3-year-old levels at the November meeting, OPEC instead sought to drive oil prices low enough to make unconventional and expensive oil production, including output from shale, unprofitable and thereby听. (Related:听)
, OPEC said that a fairly rapid slowing of the growth in the output of US oil eventually would lead to 鈥渁 drop in production [that] can be expected to follow, possibly by late 2015,鈥� primarily due to the reduction of rigs in service.
听
Further, it said the halving of oil prices since late June 2014 鈥渃ould impact marginal barrel output from unconventional sources such as tight crude,鈥� a term for shale oil, which is tightly packed in underground shale deposits. As a result, it said, US oil production is on a path to grow by only 820,000 barrels a day in 2015, compared with 1.61 million barrels per day last year. (Related:听)
鈥淭ight crude producers are aware that typical oil wells in shale plays decline 60 percent annually, and that losses can only be recouped by drilling new wells,鈥� the market report said.
According to the OPEC report, though, none of this will happen before the cartel鈥檚. At best, the cartel鈥檚 12 oil ministers probably will be able to do no more than estimate the effectiveness of their strategy to reclaim lost market share.
But OPEC holds no illusions that rising demand will restore the value of its oil output. Global demand for oil has been slow in the past year, primarily in China and Europe, and the Mar. 16 report forecast no change for the rest of 2015.
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