Natural gas production across all major shale regions in EIA's Drilling Productivity Report (DPR) is projected to decrease for the first time in September. Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September. In each region, production from new wells is not large enough to offset production declines from existing, legacy wells.

The DPR provides a month-ahead forecast of natural gas and crude oil production for the seven most significant shale formations in the United States. In order to estimate total natural gas production within a DPR region in a given month, production from both new wells and legacy wells must be taken into account. New-well production is estimated by multiplying estimated rig productivity by the number of rigs operating in the region, lagged by two months. Production from new wells is then compared to the anticipated production declines from legacy wells, which are typically based on well depletion rates, to estimate net production.

In any given month, new-well production depends on the number of drilling rigs and the productivity of those rigs and the wells added through their use. As rig counts fall, increases in rig productivity are necessary not only to compensate for the reduced rig total, but also for rising levels of legacy-well declines. Given the substantial drop in rig counts since the fourth quarter of 2014 in each of the DPR regions and growing declines in production from legacy wells, productivity increases are less able to completely offset lower rig counts and legacy-well declines.

Tags: EIA