American Oil and Gas Reporter - April 2016 - 35

is mandated to regulate OCS emissions
only if the activities have significant effects
on onshore air quality. Based on the agency's
own studies, that simply isn't the case.
This is regulation for regulation's sake."
Dan Naatz, senior vice president of
government relations and political affairs
for the Independent Petroleum Association
of America, agrees. He calls the proposed
rules "the latest in a series of blows to

the oil and natural gas industry during
(President Obama's) final year in office."
"It's clear this administration continues
to mount an aggressive climate agenda
against America's oil and gas producers,
putting the views of extreme environmental
activists ahead of national energy security,
American jobs, and consumers' pocketbooks."
❒

Domestic Crude Oil Production
Relying More On Recent Wells
WASHINGTON-Crude oil produced
from wells drilled in the lower-48 since
the start of 2014 comprised 48 percent of
total U.S. production in 2015.
Production from new wells has increased
as advances in horizontal drilling and completion techniques have led to more oil
production from low-permeability reservoirs,
the agency says. In 2015, production from
tight formations accounted for more than
4.0 million barrels a day, or 50 percent of
total domestic production.
According to the agency, U.S. oil production from tight formations increased
from 500,000 barrels a day in 2009 to 4.6
MMbbl/d in May 2015, at which point
decreasing oil prices contributed to production declines (Figure 1). As of December, EIA says, oil production from
tight formations was 8 percent below
May's level. More than 80 percent of production from tight oil formations originates
from the Eagle Ford, Bakken and Permian
producing regions, the agency mentions.
Horizontal wells drilled into tight formations tend to have very high initial
production rates, but also have steep initial
decline rates, EIA points out.
Rig counts and the productivity of

newly drilled wells, which EIA says are
tracked in its Drilling Productivity Report,
are key indicators of future oil production.
That production also can be affected by
the inventory of drilled but uncompleted
wells, as well as the potential for increasing
production by recompleting and refracturing wells that are producing already,
the agency indicates.
The U.S. oil-directed rig count totaled
nearly 1,600 rigs in the fall of 2014, according
to Baker Hughes, the agency cites. The decline in oil prices over the past 18 months
reduced the number of active rigs to only
413 as of Feb. 19, the EIA states.
Low oil prices and reduced capital
expenditures for drilling have been reflected in declining U.S. oil production
since May 2015, despite the continuing
increase in initial production rates among
wells still being drilled and completed,
the agency says.
Oil production from new wells so far
has been able to keep domestic crude oil
production from falling significantly below
its level in late 2014. However, EIA's
Short-Term Energy Outlook projects U.S.
oil production will fall to 8.7 MMbbl/d
this year, and to 8.2 MMbbl/d in 2017. ❒

FIGURE 1
U.S. Crude Oil Production by Age of Well
10
Well Age
Started producing
within 2 years
Started producing
between 2 and 4 years
ago
Started producing
more than 4 years ago

Million Barrels a Day

8
6
4
2
0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: Well age reflects difference between calendar year and the year the well began production
Source: U.S. Energy Information Administration, based on DrillingInfo and EIA-914 survey

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American Oil and Gas Reporter - April 2016

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