Page 14 - NorthAmOil Week 25

NorthAmOil PERFORMANCE NorthAmOil

US oil producers

cautiously restoring

curtailed output

US OIL prices have been relatively stable in recent
weeks after significant volatility in March and
April. With West Texas Intermediate (WTI)
close to $40 per barrel, certain US producers feel
confident enough to start restoring some of the
output they have curtailed since March. How-
ever, a drop in prices this week on high US crude
inventories and a rise in coronavirus (COVID-
19) cases in the US and elsewhere may serve as a
warning not to move too quickly.
Continental Resources is among the compa-
nies saying that it will start to restore some of its
output in response to current crude prices. The
company, which focuses on the Bakken play and
the Anadarko Basin, said it expected to bring
back around 20% of its shut-in production in
July.
Continental said in a statement that it antici-
pates its July output averaging 225,000-250,000
barrels of oil equivalent per day (boepd), and
its second-quarter production to be around
200,000-205,000 boepd. This comes after it was
reported in April that the company had halted
most of its production in North Dakota – home
to the most productive portion of the Bakken.
Another shale driller, Devon Energy, has said
that it does not need to curtail output if prices
remain at current levels. “With prices where Analysts have estimated that up to 500,000
they are now, if they stay above $30 [per barrel], barrels per day (bpd) of US shale production –
I wouldn’t expect any significant curtailments around a quarter of what has been shut in since
from us in Q3 or beyond,” Devon’s CEO, David the downturn started – could soon return to the
On June 24, WTI Hager, said at a JP Morgan energy conference last market. Hydraulic fracturing activity tracker
week.
Primary Vision estimates that 500,000 bpd of
prices tumbled Certain shale producers have already begun output will return to the market by the end of
by $2 to around restoring some of their output. EOG Resources June, while Rystad Energy is more cautious, pro-
and Parsley Energy both disclosed plans to start jecting that 400,000 bpd could be brought back
$38 per barrel, bringing shut-in output back online in early online between June and August.
However, oil prices of around $40 per bar-
June. And the return of production is not limited
as federal data to shale plays. ConocoPhillips – which has both rel – which are not guaranteed – are expected to
shale and conventional operations – has also continue acting as a brake on new drilling, even
showed that US said it is considering restoring some of its cur- as some existing production is restored. And as
crude inventories tailed volumes, which account for about a third US output is being restored, there are warnings
of its production, over the next few months. This that this could complicate global efforts, includ-
had risen. includes a plan to restore shut-in production in ing those by the OPEC+ group, to stabilise crude
prices by restricting output.
Alaska by July.
The company announced that it was curtail- On June 24, WTI prices tumbled by $2 to
ing its Alaskan oil production in late April. The around $38 per barrel, as federal data showed
plan involved taking 100,000 bpd of gross oil that US crude inventories had risen by 1.4mn
output from the Kuparuk River unit and West- barrels last week. This far exceeded analyst
ern North Slope’s Greater Mooses Tooth and expectations, and was attributed to rising pro-
Colville River units offline for the month of June. duction. The industry will closely watch what
ConocoPhillips began ramping its Alaska oper- happens next, and shale drillers in particular
ations down in late May, as part of a broader cur- could be quick to curtail output again if prices
tailment of production in the US and elsewhere. drop further.™

P14 www. NEWSBASE .com Week 25 25•June•2020