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Shale output in most U.S. formations expected to fall: EIA

shale output to drop 2021

Shale output from the United states is expected to fall in almost all of the seven major formations, with the exception of the Haynesville region, where it is expected to remain flat, the Energy Information Administration forecast in its latest monthly report.

According to the agency, U.S’s shale output would decrease to a low record of 7,44 million barrels per day, in January 2021. The drop, of nearly 136,000 barrels, would be the lowest since June 2020.

The greatest declines are expected to happen in one of the major formations in the U.S., the Permian Basin of Texas and New Mexico, where production may fall by 44,000 barrels per day, to a low record of 4,2 million barrels per day.

After the Permian, the Eagle Ford basin is expected to endure the most reductions. Production is expected to slide by 25,600 barrels per day, to a total of 987,000 barrels, EIA’s data showed.

Overall production would fall for the fourth straight month, to the most since May, when producers slashed their output to cap the economic hit of the pandemic and the demand destruction. Then, the production cuts reached 1,6 million barrels per day.

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Shale and natural gas production to fall

Nevertheless, this market landscape may recover as the vaccination process in the U.S. helps with the covid-19 pandemic and economic restoration. New drilling riggs in the total rigg count may help with recovery too.

EIA also reports an expected drop in natural gas production. It may drop by 0,74 billion cubic feet per day, to a total of 80,78 bcfd. The drop would represent the lowest point of production since May 2020, when the pandemic was at a peak.

Natural gas production may fall worse in the Permian Basin, by 0,16 bcfd. Production, again, is expected to fall in all regions except in Haynesville.

As reported by Reuters, “producers drilled 334 wells and completed 478 in the biggest shale basins in November. That left total drilled but uncompleted (DUC) wells down 144 at 7,330, the fourth consecutive monthly decline and the lowest since November 2018,” the news agency says.

According to EIA, this behavior is explained by the global demand contraction due to the covid-19 pandemic, and instability during periods of rapid decreases or increases in the volume of well production. Like shit-ins, freeze-offs or extreme weather events.

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