(Repeats with no changes. John Kemp is a Reuters market
analyst. The views expressed are his own)
* Chart 1: tmsnrt.rs/2moZoqc
* Chart 2: tmsnrt.rs/2moXWnN
* Chart 3: tmsnrt.rs/2niqnRS
* Chart 4: tmsnrt.rs/2n9vFzX
By John Kemp
LONDON, March 9 U.S. oil production forecasts
for 2017 and 2018 have been boosted significantly as a result of
rising prices as well as improved modelling techniques for
predicting output down to the well level.
Crude production is expected to reach 9.53 million barrels
per day (bpd) in December 2017, according to the latest
forecasts from the U.S. Energy Information Administration (EIA).
Forecast output for December 2017 has been revised up from
8.29 million bpd when the agency prepared its predictions in
March last year (tmsnrt.rs/2moZoqc).
The forecasts are contained in the "Short-Term Energy
Outlook" EIA publishes every month. Forecast output has been
revised higher every month since September 2016.
Revisions are concentrated in output from the Lower 48
states, excluding federal waters in the Gulf of Mexico, so they
are mostly about shale output, rather than offshore fields and
EIA has revised expected output at the end of 2017 from the
Lower 48 excluding the Gulf of Mexico up by 1.4 million bpd
since March 2016 (tmsnrt.rs/2niqnRS).
Upward revisions stem from a combination of higher oil
prices, an increased number of rigs drilling, and improvements
Operators have added many more rigs and produced more oil
than the agency was forecasting just six months ago.
Oil prices ended up being $5 per barrel higher in the fourth
quarter of 2016 than the agency forecast back in August. Prices
in the first quarter of 2017 have so far averaged about $7
Higher prices have contributed to more drilling,
particularly in the Permian Basin of western Texas and eastern
New Mexico, raising the current rig count and actual production
the forecast uses as a baseline.
Higher rig counts have also revealed new information about
the price levels at which operators in certain areas can grow
production, which have filtered through to the models that the
In addition to the price impact, the agency has made a
number of improvements to its methodology.
According to the agency, these changes have been phased in
over several months and contributed to the upward drift in the
EIA has shifted from basin-level to well-level forecasts,
and improved its understanding of the time lags between price
changes and when operators add drilling rigs.
The agency has also tweaked the model it uses to allow for
more interplay between oil and gas prices, allowing the model to
select whether drillers will focus on oil or gas depending on
Price differentials can be important in shale plays such as
Eagle Ford which have both liquids-rich and gas-rich areas.
Finally, the agency has updated its assumptions about
improvements in drilling efficiency, allowing efficiency to
change more quickly.
As a result, U.S. production is now expected to pass its
previous peak in March 2018 and to reach 10 million bpd by the
end of 2018 (tmsnrt.rs/2n9vFzX).
(Editing by David Evans)