12 February 2014, News Wires – The Energy Information Administration on Tuesday lowered its U.S. crude oil production forecast for this year and next due to recent severe weather but said improving technology could boost shale oil output over the next two years.
In its latest monthly short-term energy outlook, the information arm of the U.S. Department of Energy cut its 2014 crude oil production forecast by 100,000 barrels per day (bpd) to 8.4 million bpd and by 100,000 bpd to 9.2 million bpd for 2015.
“The U.S. crude oil production forecast for both 2014 and 2015 was revised downward … because of indications that severe weather this winter has caused temporary slowdowns in completing new wells,” the EIA said in its report.
However, it said forecasts for onshore U.S. crude production, which includes soaring shale oil output, have undershot actual production, as companies improved the productivity of their fields by experimenting with their drilling processes.
“Technological innovation may cause a faster rise in drilling productivity than currently forecast,” the EIA said, adding if that happens, its onshore estimate of 5.7 million bpd in 2013 and forecast of 7.1 million bpd in 2015 would be overshot.
Offshore oil production in the Gulf of Mexico should grow from 1.3 million bpd in 2013 to 1.6 million bpd in 2015, based on industry plans. But here, the risk is to the downside from unpredictable weather conditions including hurricanes, which lead to outages and project delays, the EIA said.
The EIA laid out its global production forecasts in the report. It increased the 2014 forecast for production by OPEC-member countries by almost 300,000 bpd to 35.73 million bpd.
At the same time, it decreased its forecast for production out of countries that are not members of the Organisation of the Petroleum Exporting Countries by 110,000 bpd to 55.96 million bpd this year and by 90,000 bpd to 57.46 million bpd next year.
The EIA also revised downwards its OPEC surplus production capacity 4.6 percent, or 120,000 bpd, to 2.54 million bpd. The industry and oil traders keep a watch on the global surplus capacity during times of significant supply disruptions.
Unplanned outages in Libya and Nigeria, sanctions on Iran that had cut supplies to the world and other disruptions accounted for 3.2 million bpd of oil at the end of 2013. “OPEC members continue to account for most of the global supply disruptions, averaging 2.3 million bpd in January,” EIA noted.