The long decline in drilling in shale oil regions is now having a significant impact on output. The EIA's latest Drilling Productivity Report forecasts that shale oil output in the six main shale oil and gas regions will decline m/m by 93 thousand barrels per day (kb/d) in July, bringing the cumulative decline during May, June and July to 209kb/d.
Had average US shale oil growth continued at the same pace as in Q4-2014, total additional output from January to July 2015 would have been 966kb/d. However, the latest EIA data forecasts that the total increment over that period will be just 123kb/d.
"We expect total shale oil output to reach 5.15 million barrels per day (mb/d) in December, 191kb/d lower than in December 2014 and 542kb/d lower than the peak reached in April. Shale's decline has been a long one, and we expect the recovery will also be a prolonged affair. Modest m/m growth should resume in Q1-2016, although it will not be enough to compensate for the y/y decline of more than 1mb/d in conventional non-OPEC output we expect in that quarter." - said Standard Chartered in a report.
