US oil companies have increased production by 1.2m barrels a day over the past six weeks, as they restore wells shut earlier this year and start producing from others they left unfinished as prices sank. Output bottomed out at 9.7m b/d in the second week of June but has since risen to 10.9m b/d as activity starts to pick up in the big shale fields of Texas, according to Genscape, a division of consultancy Wood Mackenzie that monitors energy flows. That figure is more than the UK’s entire crude production of 1.1m b/d.
US production should now stabilize at about nm b/d through to the end of 2020, analysts said. That is well below the 13m b/d in March before the Saudi Russian price war and coronavirus pandemic devastated US oil prices. “It’s a slow, slow recovery, but it’s happening,” said Alexandre Ramos-Peon, a senior analyst at Rystad Energy, a consultancy.
Despite the restarting of wells shut around the time the US oil price plunged below zero in April, drilling activity remains weak. The number of operating rigs was just 251 last week, compared with about 800 in January.
But oilfield services companies say activity is beginning to pick up as operators redeploy crews to bring drilled-but-uncompleted wells into production. Hydraulic fracturing, or fracking, uses water, sand and chemicals pumped into a well to open small cracks that will release the oil or gas.
The rise in fracking will ease fears that production could slip into an even more severe downward spiral.