By Ovi

All of the oil (C + C) production data for the US states comes from the EIAʼs Petroleum Supply monthly PSM. After the production charts, an analysis of three EIA monthly reports projecting future production is provided. The charts below are updated to June 2020 for the 10 largest US oil-producing states.

June’s production rebounded from May’s low by adding 420 kb/d. May’s output was revised up by 15 kb/d from the EIA’s July report.

After adding 11 rigs in the week of August 21, the US rig count dropped by 3 in the week of August 28 to 180. Two of the 3 rigs were parked in the Permian.

Ranking Production From US Oil States

Listed above are the 10 states with production previously greater than 100 kb/d. Over the last few months, both Utah and Louisiana fell below 100 kb/d but are retained for continuity. These 10 accounted for 8,501 kb/d (81.5%) of US production out of a total production of 10,436 kb/d in June 2020. Note that of all these 10 states, only New Mexico produced more oil in June than in the same month last year. On a YOY basis, US June production was down by 1,624 kb/d.

Texas production increased by 263 kb/d to 4,673 kb/d in June, an increase of 6%. This is less than half of May’s decline of 764 kb/d.

From March 13 to August 28, the Texas oil rig count dropped by 289 to 94 or 75.5%. An output drop followed in April and a larger one in May as shown in the previous chart. However, while rigs continued to drop in June, production did rebound as shown above.

June’s New Mexico production increased by 51 kb/d to 937 kb/d. New Mexico has now passed North Dakota to become the US’ second-largest producer.

From March 13 to August 28, New Mexicoʼs rig count dropped by 71 or 61%. Over that same period, production dropped by 21%. Even though they dropped in June, June production increased.

North Dakotaʼs oil production started to drop in November 2019 after peaking at 1,480 kb/d in October. In May, output declined by 357 kb/d to 864 kb/d and then only added 8 kb/d in June to 872 kb/d.

The North Dakota rig count has held steady at 10 for the weeks of August 21 and August 28.

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Oklahomaʼs output peaked in April 2019. From a low of 361 kb/d in May, production rebounded in June 2020 by 102 kb/d to 463 kb/d. Oklahoma had 10 oil rigs in operation from the week of Aug 14 to August 28. In January, they had 50 oil rigs operating.

Colorado, after showing a small production increase in April, dropped by 23 kb/d to 471 kb/d in May and then dropped to 450 kb/d in June. Coloradoʼs oil rig count has held steady at 4 for the last 10 weeks.

Coloradoʼs oil rig count has been 4 for the last 10 weeks.

Californiaʼs slow output decline has accelerated in the last few months and dropped below 400 kb/d. June production was down by 4 kb/d to 392 kb/d and is giving an indication of slowing decline. During the last 10 weeks, California had only 4 rigs operating.

Alaska production continues its annual summer decline. In June, output dropped by 43 kb/d to a new low of 361 kb/d. This is 21 kb/d lower than the August 2019 output of 382 kb/d.

Wyomingʼs production in June increased by 57 kb/d to 221 kb/d. During the week ending August 28, Wyoming had 1 oil rig in operation, down from a high of 20 in January 2020.

Louisianaʼs output began its steady decline in January 2020. However, in June production rebounded by 15 kb/d to 90 kb/d. In January 2020, on average, 22 oil rigs were operating. There were 11 oil rigs operating during the weeks of August 14 to August 28.

Utah’s output has been in an overall decline since September 2018 when it was 109 kb/d. The production bottomed in May 2020 at 71 kb/d and rebounded to 78 kb/d in June. There were five oil rigs operating in Utah during the weeks of August 21 and 28.

In June, the GOM’s production continued to decline by another 49 kb/d to 1,563 kb/d. If the GOM were a state, its production would rank second behind Texas.

Updating EIA’s Three Oil Growth Projections

1) Drilling Productivity Report

The Drilling Productivity Report (DPR) uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil wells to provide estimated changes in oil production for the five principal tight oil regions. The charts are updated to September 2020.

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Above is the total oil production from the 7 basins that the DPR tracks. Note that the DPR production includes both LTO oil and oil from conventional wells/fields.

According to the August DPR report, LTO oil and conventional oil output peaked in November 2019 at 9,169 kb/d. The projected output in September 2020 is 7,557 kb/d, down 20 kb/d from August. Note that the August output was revised up from 7,490 kb/d to 7,577 kb/d. The biggest drop occurred in May, when production dropped by 1,646 kb/d to 6,745 kb/d. Output is expected to reach a minimum in May and then begin to increase in June. The contribution from four of the LTO basins is shown in the charts below.

Permian output in September is projected to be 4,154 kb/d, essentially the same as August, up by 7 kb/d. July was revised down from 4,160 kb/d in the July report to the current 4,039 kb/d in the August report.

The Bakken had two big output drops in April and May and then is projected to begin increasing output from June to September to 1,191 kb/d.

Eagle Ford’s output had its biggest drop in May, 211 kb/d to 1,071 kb/d. No significant increase in the Eagle Ford basin is expected between May and September. September’s drop is projected to be a much smaller 14 kb/d to 1,085 kb/d.

Niobrara output is expected to drop by 5 kb/d in September to 595 kb/d.

2) Light Tight Oil (LTO) Report

The LTO database provides information on LTO production from seven tight oil basins and a few smaller ones. The August report updates the charts to July 2020.

July’s total LTO output is expected to increase to 6,597 kb/d from a low of 6,048 kb/d in May. The drop from April to May was 1,564 kb/d.

Note that the August report brought significant revisions to the previous projections. For instance, the July LTO report projected May output to be 6,970 kb/d compared to the latest estimate of 6,048 kb/d, a downward revision of more than 900 kb/d.

Permian output in July is projected to be 3,493 kb/d, an increase of 285 kb/d from the May low of 3,208 kb/d.

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The Bakken is expected to add 195 kb/d to the May low of 850 kb/d by July.

Conventional oil declined in the Onshore L48 by 442 kb/d from April to June. July is expected to restore 96 kb/d of conventional oil. Interestingly, conventional oil in the L48 also peaked in November 2018, the current peak oil date.

3) Short Term Energy Outlook (STEO)

The STEO provides projections for the next 13-24 months for US C + C and NGPLs production. The August 2020 report presents EIA’s oil output projections out to December 2021.

The August STEO report revised its July report estimates/projections down from May to early 2021. The production estimates for May, June and July are less than 10,000 kb/d. This is surprising since many wells that were shut down could have been reopened as the price of oil recovered. The August PSM estimated May output to be 10,001 kb/d. There has been much speculation as to whether the next PSM will revise May output up or down. The STEO is projecting a major drop of 2.88 Mb/d in US L48 production from March 2020 to June 2020. (Note that the STEO projection shows June to be the low point for US production. The first chart in this post shows that May was the low.)

Now that the price of WTI has moved above $40/b in early August, it appears that the STEO March projection was closer to the early August price of $40/b than their June estimate. The August STEO is now projecting an average WTI price from July to December of $40.50, which is lower than the current price, close to $43.00 on September 1, 2020.

World Oil Production

World oil production decreased in May by 11,417 kb/d to 71,374 kb/d. OPECʼs production decrease of 6,136 kb/d in May was added to Non-OPECʼs decline of 5,281 kb/d for a total decline of 11,417 kb/d. June is projected to be the low point in world oil output. Production is expected to recover to 74,559 kb/d by September. Note that the December 2019 high of 83,546 kb/d was 1,094 kb/d lower than the high of November 2018.

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.