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The total number of wells producing crude oil and natural gas in the United States fell to 991,000 in 2017, down from a peak of 1,039,000 wells in 2014. This recent decline in the number of wells reflects advances in technology and drilling techniques. EIA’s updated U.S. Oil and Natural Gas Wells by Production Rate report shows how daily production rates of individual wells contributed to U.S. total crude oil and natural gas production in 2017.

Wells classified as nonhorizontal in the report—most of which are vertical wells—have decreased from 940,000 in 2014 to 864,000 in 2017. Horizontal wells are relatively less common, but they are growing as a share of the total: the 99,000 horizontal wells drilled in 2014 accounted for 10% of the total. In 2017, 127,000 horizontal wells accounted for 13% of total wells drilled.

Although horizontal wells are more expensive to drill than vertical wells, they contact more reservoir rock and therefore produce greater volumes. Only 1% of vertical wells...

U.S. crude oil imports from Saudi Arabia and Iraq, two of the United States’ main sources for imported crude oil, have risen since reaching relatively low points in 2014 and 2015. On a combined basis, crude oil imports from these countries are the highest since late 2012. However, recent market developments, including the November 2016 agreement among certain members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce production and the recent widening of price differences between Dubai/Oman crude oil and U.S.-produced Mars crude oil, suggest that U.S. imports from Saudi Arabia and Iraq are now becoming less attractive to U.S. refiners.

In late 2016, high production in Saudi Arabia and Iraq, as well as seasonally low internal demand in Saudi Arabia, contributed to record crude oil exports from Iraq and near-record exports from Saudi Arabia, according to data from the Joint Organizations Data Initiative (JODI). Saudi crude oil exports reached 8.3 million barrels per...

Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2017

Note: Confidence interval derived from options market information for the five trading days ending Jan 5, 2017. Intervals not calculated for months with sparse trading in near-the-money options contracts.

The U.S. Energy Information Administration’s January Short-Term Energy Outlook (STEO) forecasts benchmark North Sea Brent and West Texas Intermediate (WTI) crude oil prices to average $53 per barrel (b) and $52/b, respectively, in 2017, close to their levels during the last three weeks of 2016. These prices are expected to rise to $56/b and $55/b, respectively, in 2018.

EIA’s price forecasts have wide uncertainty bands that are consistent with contract values for future delivery. For example, contracts traded during the five-day period ending January 5 suggest that the market expects WTI prices could range from $35/b to $93/b (at the 95% confidence interval) in December 2017.

Strong demand and the rece...

U.S. crude oil proved reserves declined 4.7 billion barrels (11.8%) from their year-end 2014 levels to 35.2 billion barrels at year-end 2015, according to EIA’s recently released U.S. Crude Oil and Natural Gas Proved Reserves report. U.S. natural gas proved reserves decreased 64.5 trillion cubic feet (Tcf), a 16.6% decline, reducing the U.S. total to 324.3 Tcf at year-end 2015.

The significant reduction in the average price of both oil and natural gas between 2014 and 2015 resulted in more challenging economic and operating conditions, important factors in determining proved reserves. West Texas Intermediate crude oil spot prices declined nearly 50% from $94.55 per barrel in 2014 to $50.00 per barrel in 2015. The natural gas spot price at the Louisiana Henry Hub declined more than 40% from $4.55 per million Btu in 2014 to $2.62 per million Btu in 2015. These price reductions led to reduced drilling activity and lower reported proved reserves across a broad range of U.S. producers in 201...

On Tuesday, the Cleveland Indians are set to host the Chicago Cubs in game six of the 2016 Major League Baseball World Series. In the 68 years since the last title for the Cleveland Indians, and the 108 years since the last World Series title for the Chicago Cubs, energy production and consumption patterns in the United States have changed a great deal.

In 1908, the last time the Cubs won the World Series, the United States produced less than half a million barrels per day (b/d) of oil, with crude oil production having only started approximately 50 years earlier. At that time, crude oil was mainly refined to produce kerosene for use in lamps. The first Ford Model T automobile was produced in 1908, kicking off a shift in demand for petroleum products from kerosene for lamps to gasoline for automobiles.

The last time the Chicago Cubs made a World Series appearance, in 1945, the United States was producing 4.6 million b/d of crude oil. Production had been steadily increasing in the decades...

Short positions in West Texas Intermediate (WTI) crude oil futures contracts held by producers or merchants totaled more than 540,000 contracts as of October 11, 2016, the most since 2007, according to data from the U.S. Commodity Futures Trading Commission (CFTC). Banks have tightened lending standards for some energy companies as crude oil prices declined throughout 2014 and 2015, and some banks require producers to hedge against future price risk as a condition for lending.

Initiating a short position, or selling a futures contract, allows the holder to lock in a future price for a commodity today, which oil producers and end users can use as a way to hedge or mitigate price risk. Increased short positions may indicate that current futures prices are seen as sufficient to generate positive returns from drilling projects.

Short positions of WTI futures increased at a faster pace than futures contracts of Brent (an international crude oil benchmark) since summer 2016, suggesting U.S. pr...

July 18, 2016

Although the crude oil price decline since 2014 has led to significant reductions in operating cash flow for U.S. oil companies, their immediate financial situations are improving. As oil companies' spending falls and crude oil prices increase, the need for oil companies to find external sources of funding may decline, which could reduce financial strain in the coming quarters.

First-quarter 2016 financial results from U.S. onshore producers reveal an improving balance between capital expenditure and operating cash flow. Although operating cash flow was the lowest in any quarter in the past five years, larger reductions to capital expenditure brought these companies closest to self-finance (when capital investment can be paid for entirely from operating cash flow). With crude oil prices such as the global benchmark Brent price averaging over $45 per barrel in the second quarter—a 34% increase from first-quarter 2016—cash flow may improve and help offset declining revenue from lower prod...

The U.S. Energy Information Administration projects that U.S. petroleum and other liquid fuels production, which in addition to crude oil and condensate production includes natural gas plant liquids derived from natural gas processing as well as biofuels and volume gain at refineries, is projected to grow from 14.8 million barrels/day (b/d) in 2015 to 18.6 million b/d in 2040 in its Annual Energy Outlook 2016 (AEO2016) Reference case. Given the uncertainty inherent in making projections, AEO2016 also includes several alternative cases, based on different assumptions for world oil prices, macroeconomic growth, resource availability, technology improvement, and other factors. Differences in crude oil from tight formations (tight oil) and natural gas plant liquids (NGPL) account for most of the differences in production across these cases. 

The oil price cases illustrate the effect of higher or lower global crude oil prices on U.S. production and use of petroleum. By 2030, the Brent crude...