Troubling Signs At Bakken As Oil Production Growth Stalls

The euphoria of rising U.S. oil production continues in the Mainstream media while troubling signs are now taking place at the Bakken.Even though overall U.S. oil production has climbed due an increase in drilling rig activity, supply from the Bakken has stalled.

According to the most recently released Drill Productivity Report from the EIA – U.S. Energy Information Agency, oil production at the Bakken is forecasted to decline in May:

The data from the Drilling Productivity Reports states the Bakken will add 43,000 barrels per day (bd) of new oil production in May, but its Legacy Decline will be 44,000 bd. Thus, overall oil production at the Bakken will decline a modest 1,000 bd in May.As we can see from the chart above, the Bakken’s overall trend is heading lower.

Furthermore, the peak of Bakken oil production took place at the end of 2014 at 1.2+ million barrels per day (mbd), and is now a little more than 1 mbd. You would think with an oil price now trading in the $50 range, much higher than the $30 range in the beginning of 2016, oil production would be growing once again at the Bakken.However, it is not. Actually, the Bakken was producing more oil in the beginning of 2016 when the price was in the $30’s than it is today with the price in the $50 range.

Now, the reason for the increase in U.S. oil production has largely due to the growth in the Eagle Ford and Permian Region:

The Eagle Ford in Texas is forecasted to increase its oil production by 38,000 bd in May, however its production has not increased all that much from its bottom at the end of 2016. Furthermore, Eagle Ford’s oil production is still 500,000 bd lower than its peak set in the beginning of 2015.

Now, the region in the United States that has seen its oil production increase the most, is the Permian:

Oil production growth at the Permian is estimated to increased 76,ooo bd in May. However, for the Permian to increase its production in May, it will have to add 205,000 bd of new production as its Legacy decline will be 129,000 bd. Which means, the Permian is now losing 129,000 bd of oil production each month (and this figure is growing).