U.S. Lower 48 oil production will continue to grow, but at a much slower pace than expected this time a year ago as lower oil prices impact production and industry capital expenditures, according to recent analysis by Wood Mackenzie.
However, a Wood Mackenzie analyst emphasized that the firm doesn’t expect an annual trend of declining production to occur until oil prices remain at $50/barrel for a two-year period.
Lower 48 production grew by 1.1 million barrels per day (bpd) during 2014, but Wood Mackenzie expects the rate of growth to decline going forward, with 675,000 bpd incremental production forecast for 2015 and 425,000 bpd of incremental production growth in 2016.
As a result, Wood Mackenzie estimates a long-term impact of this growth to be 800,000 bpd by the end of the decade. Due to the reductions and cuts in rig activity, which happened more quickly than Wood Mackenzie expected, the firm anticipates seeing a flattening and plateau of monthly production in mid-2015.
Beyond that, month-over-month declines in production could occur in the second half of 2015 as static comes out of the North America supply story, particularly for tight oil, over the next couple of years.