US Shut-Ins Could Reach 2MMBPD in June
Gross U.S. production cuts, including liquids, could reach two million barrels per day (bpd) in June, according to a new Rystad Energy analysis, which was published on Wednesday.
Net oil production cuts could reach 835,000 bpd in May and 877,000 bpd in June, according to Rystad Energy’s interpretation of early communication from 31 U.S. oil producers. This represents gross curtailments (including royalties to the government) of over one million bpd in both May and June, and at least 1.5 million bpd if total gross liquids output is considered, according to Rystad Energy.
Adding the potential uncommunicated contribution from private and smaller operators, total Covid-19-related gross liquids output curtailments could “easily” hit at least two million bpd in June, Rystad Energy outlined.
According to Rystad Energy, these figures do not represent the total production curtailment that the U.S. is experiencing and will experience. Actual production cuts are “probably larger” and occur not only as a result of shut-ins, but also due to a natural decline from existing wells when new wells and drilling decline, Rystad Energy highlighted.
In total, pure-Permian and Permian-focused producers will drive 42 percent of the oil curtailments expected in June, Rystad Energy outlined. Diversified producers with activities spread across multiple plays will lead 35 percent of the cuts and Bakken-focused operators cover 18 percent of the cuts, according to Rystad Energy, which said the rest is spread among Niobrara/PRB Tight and Eagle Ford producers.
Earlier this month, Rystad Energy outlined that company guidance hinted at the shut-in of 616,000 bpd of U.S. output shut-in during May and 655,000 bpd shut-in during next month.
Rystad Energy describes itself as an independent energy research and business intelligence company. The business is headquartered in Oslo, Norway, but has offices all around the globe, including in New York and Houston.
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