US unconventional oil production seen rising 143,000 b/d in August to 7.470 million b/d

Houston (Platts)--16 Jul 2018 328 pm EDT/1928 GMT

US unconventional oil production is projected to rise 143,000 b/d in August to 7.470 million b/d, the US Energy Information Administration said Monday, the second-highest month-to-month volume growth increase since the agency has kept those records.

Moreover, drilled but uncompleted (DUC) wells in the Permian Basin rose 164 in June to 3,368, one of the largest builds in recent months, the EIA said in its latest Drilling Productivity Report. By comparison, the DUC build in May was 169 and in April was 133.

In addition, the Permian Basin in West Texas and southeast New Mexico, in unconventional oil production, is seen far outdistancing other shale basins in monthly growth in August, at 73,000 b/d to 3.406 million b/d, EIA said.

Oil industry experts are closely watching the basin, which began the year producing around 3 million b/d of oil, since output is rising rapidly and existing takeaway capacity is filling up and predicted to create transportation bottlenecks over the next year or so.

In addition, the Eagle Ford Shale of South Texas is forecasted at month-on-month oil growth in August of 35,000 b/d, to 1.436 million b/d, while the Bakken Shale of North Dakota and Montana is pegged to grow 15,000 b/d next month to 1.297 million b/d.

Rounding out the five large oil plays, the Anadarko Basin of Oklahoma and the Texas Panhandle is predicted to grow 10,000 b/d next month to 559,000 b/d, while the Niobrara Shale in Colorado and Wyoming is pegged to increase by 6,000 b/d to 611,000 b/d.

In addition, the Appalachian Basin in Pennsylvania, Ohio and parts of West Virginia and Maryland, is forecasted at 4,000 b/d of oil growth in August to 118,000 b/d. The Haynesville Shale, in northeast Louisiana and east Texas, is targeted to remain flat in August at 43,000 b/d. The Appalachian and Haynesville plays are largely gas-prone basins with small crude outputs.

DUCs have been of interest to industry, particularly in the Permian, also because of tight takeaway capacity. Experts are concerned that if oil and gas cannot find a way out of the basin, wells will need to be "banked" for the next year or so until new midstream capacity comes online in the third quarter of 2019. --Starr Spencer, starr.spencer@spglobal.com

--Edited by Kevin Saville, kevin.saville@spglobal.com

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