US unconventional oil output almost flat in February, sliding to 9.68 million b/d: EIA

US unconventional crude oil production is forecast to remain nearly flat in February for a third straight month, falling just 2,000 b/d on the month to 9.68 million, the US Energy Information Administration said Jan. 16, as domestic rig counts continue bounce around at either unchanged or slightly lower levels.

Natural gas output is also slightly falling, EIA data showed in its monthly Drilling Productivity Report, down 187,000 Mcf/d in February to 98.889 Bcf/d.

The month-on-month declines for oil and gas are much smaller than the agency's predictions a few months ago of decreases of as much as 40,000-50,000 b/d of oil and 300,000-400,000 Mcf/d of natural gas.

EIA upstream senior analyst and DPR report author Josef Lieskovsky said the biggest difference the EIA has seen in the last few months has been increased productivity in the Permian, Appalachia and Haynesville.

"Permian productivity was revised higher, and that's the most significant part of the difference between the last couple of months and the most recent one," Lieskovsky said.

Within the seven individual unconventional basins the DPR tracks, month-on-month changes were minor.

Output in February is only seen rising in the Permian Basin, the largest of all US basins, with sizeable levels of both oil and gas output. Oil production there is seen increasing by 5,000 b/d to 5.974 million b/d, while gas output should gain 122,000 Mcf/d to 24.4 Bcf/d.

Oil output in the Bakken, Niobrara and Anadarko plays are each predicted to drop by 1,000 b/d on the month, leaving their respective production levels at 1.303 million b/d, 689,000 b/d and 391,000 b/d.

Oil output in the Eagle Ford Shale is forecast to decrease by 2,000 b/d on the month to 1.147 million b/d.

Most gas-focused basins should lose output, with Appalachia seeing the biggest drop in February, a fall of 159,000 Mcf/d to 35.48 Bcf/d.

The Haynesville should be second in losses, down 88,000 Mcf/d to 16.3 Bcf/d, followed by the Eagle Ford Shale, which is seen down 46,000 Mcf/d to 7.221 Bcf/d, and the Anadarko Basin, down 27,000 Mcf/d to 6.667 Bcf/d.

The Bakken Shale and the Niobrara will likely see higher gas output. The Bakken could rise about 10,000 Mcf/d in February to 3.489 Bcf/d, while the Niobrara may see a gain of 1,000 Mcf/d to 5.339 Bcf/d.

Weather not factored in estimates

Amid a severe Arctic weather event affecting large swaths of the US, including Texas, the largest producing state, EIA included a note in its Jan. 16 DPR data release saying it "does not incorporate any weather events into estimates, and we will capture any drops in production due to severely cold weather in future editions" of DPR reports.

The brutal cold has affected normally mild winter weather areas. Temperatures in some Deep South states are as much as 30 F below average and dozens of record lows are possible.

DPR figures are based in large part on rig counts, and those have been flattish in recent months. From about mid-August to mid-November, S&P Global Commodity Insights data showed a relatively stable count of around 700 rigs, but that has since dropped by nearly 30 rigs.

For the week ended Jan. 3, the rig count was 673, down four on the week, according to S&P Global data.

Moreover, drilled but uncompleted, or DUC, well counts continue to drop. For December, there were 4,378 DUCs spread among the seven unconventional basins, down 64 on the month. But that is less than the drop of 91 from October to November, a drop of 121 September to October, and a drop of 155 from August to September.

Also, completions have slowed in recent months, particularly in the Permian, Lieskovsky said, noting the Eagle Ford for the last five weeks "has had the lowest number of completions since COVID."